Streamlining the EBA billing process: We recently participated in a Lean Value-Stream Mapping event to outline the current EBA billing process and highlight potential areas of improvement for both users and EBAs. As a result of this effort, which involved core offices, customers, and EBAs, we are working with a team across campus on this process.
Do all EBAs need to follow these directives?
Yes. If the objective is to recover charged costs of providing it to users, then it is necessary to follow the EBA requirements.
Is there a threshold for being defined as an EBA?
No. With the assumption that your unit meets the other EBA criteria, it does not matter whether you have $250,000 in revenue or $2,500. You are required to follow the recharge center requirements.
What is Uniform Guidance?
Uniform Guidance is short for “Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards”. This is a set of federal guidelines by the Office of Management and Budget (OMB) that recharge and to which cost centers must adhere to, with some exceptions. Click here for additional information or to browse the Uniform Guidance.
If I don’t charge any Sponsored Projects, do I still have to follow these rules?
Yes, the same requirements still apply.
What if my users are mostly/entirely non-sponsored (non-grant) accounts?
The requirements still apply (although the audit risk may be lower).
Set Up or Modify an EBA
What is the difference between Internal and External Customers?
Internal Customers – the University Departments and their transactions with one another.
External Customers – Faculty, students, and staff.
Do I have to create a separate ChartField string for the service center?
Yes. Finance and Accounting recommends setting up a separate Chartfield to appropriately capture service center activity separately from other non-related activities.
What should I do if our unit has already begun operations during the year and would like to move service center activities to a new ChartField string?
All current revenues and expenses should be moved to the newly approved ChartField string (this will be established at time of application). Contact Finance and Accounting for help with the journal entry.
Why are rate calculations and approved rates required?
Recharges are often direct costs on grants and contracts. As such, they must conform to federal requirements for direct costs (in OMB Uniform Guidance). They must also conform to specific federal requirements related to how rates/fees are established and assessed to users. Additionally, like any other sponsored project cost, in the event of an audit, documentation must exist to support them.
What are the acceptable and measurable units to allocate cost?
Labor Hour, Machine Hour, CPU Unit, Daily Rate, Test, Slide, Page, Cup, etc.
Is Membership an acceptable and measurable unit to allocate cost?
No, membership is not an appropriate cost-based unit.
Can we give discounted rates to certain users?
The discrimination of users is not allowed. For example, you cannot set a rate specific to your department. However, if a group requires discounted rates, a subsidy from another source may be provided to account for the difference.
What rate can I charge users?
An internal user rate cannot be greater that the calculated/break-even rate. An external rate can have a surcharge that is above the break-even rate.
When do service enters need to submit their rates for review and approval?
Cost centers must submit their rate proposals to Auxiliary Accounting for review and approval when any of the following apply:
The center is initially established.
New services or products are added.
Significant changes are made to the methodology used to calculate the rate(s).
Can the prices be adjusted during the year?
If the estimate originally provided has significantly changed, the department may submit a revised rate recalculation worksheet. Once approved, the new rates can be changed. See the Rate Development section page for information on how to recalculate the rates.
Is Equipment Depreciation allowed to be recharged in the Service Centers?
No. The University recovers the Equipment Depreciation as part of the Federal Facilities and Administrative (F&A) proposal. Only an approved Specialized Service Center may include depreciation in their rates. A special approval from Auxiliary Accounting and Cost Accounting is required to be established as a Specialized Service Center.
Can Surplus be used for the purchase of capital equipment?
Capital equipment (over $5,000) cannot be purchased from Surplus. It can be funded from Grants, Donations, Reserve Funds that receive surcharge revenue from external customers, and funding from colleges.
How much Working Capital Allowance can the unit have?
The service center can have a working capital allowance of up to 60 days. (Annual expenses divided by 6). For example: Annual expenses were $200,000. Therefore, the unit would be allowed to keep up to $33,000 in working capital reserve ($200,000/6). Surplus up to 60 days does not need to be included in the rate calculations.
If the department generated a surplus, does it have to be carried forward to the future years?
Yes. A surplus does have to be carried forward. A plan must be produced by the department to show how this surplus will be eliminated in future years.
How should a surplus be calculated?
Surplus must be calculated in aggregate (across the entire center), and by each service line (if the center has more than one service).
Operating an EBA
How do I go about invoicing Internal Customers?
Please refer to the Billing page for more information on the Internal Customers invoicing process. Included on this site are requirements regarding processing of the internal charges.
How do I go about invoicing External Customers?
Please refer to the Billing page for more information on the External Customers invoicing process. Included on this site is a sample invoice, receivable requirements, and guidelines of the University.
Which units have to submit an annual certification, surplus/deficit analysis and rate re-calculations?
All units with Federal billings from $50,000 and above
All units with Federal billings of $10,000 up to $50,000 must complete a self-certification process and submit to Auxiliary Accounting. See Required Reporting page for additional details on how to complete this process.
Do I have to submit the certification if the rates are not changing?
Yes. It is important to have the documentation of the surplus/deficit analysis and the most current rate calculation on file.
Our department is planning to offer a new lab service to researchers within our College. Where should the money be deposited?
Revenues collected from sales of goods or services are generally deposited in Auxiliary Funds. In some circumstances, when the amounts are small or the activities are not recurring, an ‘Incidentals Fund’ can also be used. However, all such business activities should first be approved by the appropriate authority. Contact Auxiliary Accounting for more specific advice.
Over the years, our auxiliary has accumulated money that is not needed for our regular operations. Can we use this money to pay other non-auxiliary expenses?
No. Revenues generated by auxiliary activities cannot be used to pay for expenses that are not related to the auxiliary. In other words, all expenses paid from auxiliary money should help generate the auxiliary revenues. In addition, it is generally not possible to transfer money from an auxiliary fund to a non-auxiliary fund.
On the Monthly Financial Report for my department, I have noticed an Insurance expense. What is this expense?
UF is part of the State Self-Insurance Program, and each year, Environmental Health and Safety sends the premiums related to Auto Liability and Property Insurance to the Auxiliary team. In September, an assessment is passed through to individual auxiliaries based on the following:
Total Auto Liability premium is allocated based on the number of vehicles at the end of the prior fiscal year.
Property Insurance is based on building values.
What is the Auxiliary Overhead Assessment?
EBAs share the funding of support unit costs incurred by the University through the allocation of the overhead assessment as part of the Responsibility Center Management (RCM) budgeting process. The overhead assessment is adjusted annually based on the RCM calculation. It will typically appear on the general ledger in account 813xxx: Administrative Overhead. For more questions regarding this charge please contact the UF Budget Office.
What are the reporting requirements for an auxiliary?
Auxiliary department requests Financial Statements from specific Auxiliaries based on revenues collected. Auxiliaries with estimated revenue in excess of one million dollars per year are required to submit Semi-Annual Financial Statements. All other Auxiliaries are required to submit only annual accrual information. Reporting must be done 3 weeks after the close of the quarter and 5 weeks after the end of the fiscal year (4th quarter).
I have received a negative cash balance notification. Now what?
General Accounting regularly checks for negative cash balances. If your department is carrying a negative cash balance, you will receive a notification from General Accounting. Upon receiving this notification, the department must make necessary corrections to bring cash back to a positive balance. Additionally, you should provide details as to what corrections are being made to resolve the negative cash balance.
What is a ‘negative’ cash balance?
If the expenses in a given Auxiliary Department ID exceed the cash balance of the Auxiliary, your department will carry a negative cash balance. It is expected that your department maintains a positive cash balance at all times, as spending authority for an Auxiliary is controlled by available cash.