|Policy Number: 6.17||Effective Date: 01/20/2000|
|Responsible Unit: Financial Management||Last Revised Date: 02/14/2020|
|Email: FNSV-Financial-Management@arizona.edu||Phone: 520-621-9097|
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.
This policy applies to all University locations and units, including all University extensions, satellite locations, and off-site campus units, both domestic and international.
The Administrative Service Charge is assessed on accounts that are within the Auxiliary and Designated fund groups.
- Auxiliary Fund Group: All accounts assigned to Fund Group AX (Auxiliaries) in the chart of accounts.
- Designated Fund Group: All accounts assigned to Fund Group DE (Designated) or DR (Designated – Service Centers) in the chart of accounts.
- 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.
- 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.
- Administrative Service Charge rates for revenues and expenses are set by the Senior Vice President for Business Affairs and Chief Financial Officer and can be altered at any time.
Setting the Rate
- The ASC rates are presently assessed on Designated and Auxiliary Fund Groups and are set as follows:
- 11.0% on revenues from external sources
- 2.0% on operational expenditures
Assessing Administrative Service Charge
- The charge is assessed and posted in 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
- For the revenue-based component, only revenues from external sources (within the DE, DR, and AX fund groups) are assessed ASC. The following revenues, identified by object code, are excluded:
- Internal revenues from interdepartmental billings, indirect cost, and utility pass-through charges.
- Gifts (refer to 8.33 University Development Fund Policy and Procedure).
- Institutional fees such as tuition, ABOR approved mandatory fees, and course fees.
- For the expenditure-based component, ASC is charged on all expenditures within the Designated (DE only) and Auxiliary Fund groups with the following exceptions:
- Cost of goods sold, including the cost of farm feed.
- Student aid (object codes beginning with 68xx).
- ASC assessed against revenues.
- Institutional designated accounts (institutional mandated costs).
- Bad debt expense (object code 5510)
- Capital expenditures (7XXX)
- Allocated funds (sub-funds ALCASC, ALCINV, ALCPRG, and ALCSRF).
- Transfers out (object codes 7930 and 7939)
- Accounts within the Fixed Price Complete Residual Revenue (FIXEDP) sub-fund.
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 in which the GEC is processed.
2.01 Structure of the Accounting System
* 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.