18.10 Service Center Policy

Last Revised Date
Wednesday, April 1, 2020 - 9:33 am

Policy Information

Policy Number: 18.10 Effective Date: 09/16/2012
Responsible Unit: Financial Management - Rate Studies Last Revised Date: 04/01/2020
Email: ratestudies@fso.arizona.edu Phone: 520-621-9097

Purpose and Summary

The Service Center Policy's full intended purpose is to standardize consistent business practices throughout all University departments where Service Center activity is present to allow for more accurate measurement, accountability and interpretation. This policy also provides guidance on Service Center operations and financial compliance.

The Uniform Guidance is in direct support of consistent business practices and is expressed as a requirement throughout. Any Service Center that is charging federal grants and contracts is required to comply with federal government regulations. This policy serves as a guideline for Service Centers to comply with federal regulations.

Source

Arizona Board of Regents (ABOR) Policy 1-105 Competition with Private Enterprise
Arizona Revised Statutes § 41.2753
Uniform Guidance:
2 CFR Chapter II, Part 200, et. al. Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards
48 CFR § 9903.101 Cost Accounting Standards

Scope

This policy applies to all University locations and units, including all University extensions, satellite locations, and off-site campus units, both domestic and international.

Definitions

  1. Service/Recharge Center (SRC): An SRC is a discrete operating unit within a University department. An SRC will provide goods/services primarily to departments within the University (internal customers) based on a determined cost-based rate. The financial aspects of an SRC are separate from other business activities within a department. They have their own Equipment Reserve accounts; they set aside the recapture of depreciation and /or interest expenses related to SRC capital equipment. SRCs have their own equipment and space to run their services.
  2. Service Center (SC): An SRC is classified as a Service Center if the service/product is readily obtainable in an open market. An SC does not operate in heavily monitored facilities and does not require highly complex equipment to provide a service/product.
  3. Recharge Center (RC): An SRC is classified as a Recharge Center if the service/product has limited availability in the open market. An RC may or may not operate in heavily monitored facilities and may or may not require highly complex equipment to provide a service/product.
  4. Specialized Service Facility (SSF): An SRC is classified as a Specialized Service Facility if the service/product has limited availability in the open market and the Service Center has a $1,000,000 expenditure threshold. An SSF operates in heavily monitored facilities that require highly complex equipment to provide a service/product.

For additional definitions, refer to the Rate Study Handbook (RSH)

Policy

  1. Service/Recharge Centers (SRCs) must operate in accordance with federal regulations. By complying with the Service Center Policy and adhering to the RSH, the SRC will comply with Uniform Guidance and other applicable federal guidelines. 
  2. Compliance required to be achieved by an SRC includes the following:
    1. SRC must apply accounting practices in a consistent manner.
    2. Billing rates must be consistently applied to all internal customer fund sources.  
    3. SRC will not bill federal or internal customers for services until rendered.
    4. SRC will follow procedures as documented in the RSH.
    5. SRC will not violate ABOR 1-105.
    6. SRC activity must obtain approval from the office for Research, Innovation & Impact (RII) and Financial Services Rate Studies.
    7. SRC must retain consistently updated rates.
    8. SRC must operate at a break-even basis. Rates must be calculated to recover reasonable, allocable, and allowable costs applicable to the goods/service.
  3. Colleges and departments are responsible for the formation of the SRC business plan, as well as ongoing management not limited to creation of SRC accounts, maintaining financial records, implementing approved rates and executing contracts and agreements following federal and University guidelines.

Procedures

  1. Refer to the RSH for complete Service Center procedures.
  2. Financial Services Rate Studies is responsible for providing centralized administrative support to SRCs to ensure financial accountability and facilitate SRC operations. Financial Services Rate Studies will review billing rates, provide guidance on policy and procedures, and execute post reviews on SRCs.

Frequently Asked Questions

  1. How do I determine if an operating unit, where business activity is present within a department, qualifies as an SRC?
    Refer to RSH Figure 2: Service/Recharge Center (SRC) Annual Classification Test.
     
  2. Who do I have to contact before I begin providing goods/services to a potential customer?
    If the customer is an internal customer, which is a University community customer who acquires SRC goods/services with a UAccess Financials account, contact Financial Services Rate Studies.  If the customer is an external customer, contact Sponsored Projects and Contracting Services (SPCS) for contracts and agreements prior to providing pricing information to the external customer.
     
  3. How do I fill out a rate study template?
    The Financial Services Rate Studies team can assist with the completion of the Rate Studies template.
     
  4. Do SRCs need to collect two years of financial back up data?
    Financial Services Rate Studies will use the latest fiscal year data available; departments will need to archive ten years of financial data as required by federal regulation.
     
  5. How often does a rate study need to be updated? Can we adjust rates during the year?
    An SRC is required to update their rate study every two years. In cases of major operational changes, rate studies can be done prior to the two-year limit.
     
  6. How many rates can one SRC have?
    The number of rates depends on the number of services the SRC provides.
     
  7. Can an SRC provide discounts to certain customers?
    No, all rates must be applied consistently to all customers.
     
  8. What rate should we charge external customers?
    External rates should be at least the internal rate plus any additional direct and facilities and administrative (F&A) costs, refer to RSH 9.28 for guidance on premium rates.
     
  9. Do SRCs have to include all costs when calculating rates?
    Yes, SRCs should include all allowable costs, which include salaries and wages, ERE, operational costs, service agreements, etc.
     
  10. What are some examples of unallowable expenses for an SRC?
    Alcohol, entertainment, fines/penalties, donations/gifts, and some travel. For a comprehensive list of unallowable expenses see the RSH 9.13.
     
  11. Can SRC accounts purchase equipment and include depreciation in the rate?
    When certain conditions are met, an SRC can purchase equipment through an SRC account and include depreciation in the rate. Refer to RSH 5.00 for guidance.
     
  12. How do SRCs capture depreciation within the rate?
    The University uses the straight-line method to calculate depreciation and will capture a full year of depreciation at the time of acquisition.
     
  13. How do SRCs handle repair/maintenance of equipment?
    Repair and maintenance that is classified as an operational expense can be included within the rates.
     
  14. What alternatives other than SRCs are available to charge customers for goods and services provided?
    The department can direct bill for actual expenses incurred for services provided. For example, the department can distribute expenses to the appropriate customer accounts.

2 CFR Chapter II, Part 200, et. al. Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards
48 CFR § 9903.101 Cost Accounting Standards
Arizona Board of Regents (ABOR) Policy 1-105 Competition with Private Enterprise
Arizona Revised Statutes § 41.2753
Disclosure Statement (DS2)
Financial Services Manual
6.17 Administrative Service Charge Policy
Rate Studies Handbook (RSH)
Rate Studies Website

Please note that sections titled Frequently Asked Questions and Related Information are provided solely for the convenience of users and are not part of the official University policy.