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Annual Working Capital

Directive Statement

The University permits the equivalent of 2 months of annual operating expense (calculated based on prior fiscal year) to be retained as “Working Capital” by a Fee-for-Service Educational Activity (FSEA).

Reason for Directive

All Fee-for-Service Educational Activities (FSEA), no matter the size, are subject to the cost principles set forth in the U.S. Office of Management and Budget Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards 2 C.F.R. §200 Subpart E §200.468 (“Uniform Guidance”).

Units must go through a rate development process to ensure an accurate composition of allowable costs on a cost recovery basis.  Although units may vary in size, complexity, and services provided by the units, they are required to follow common administrative practices.

Who must comply?

All fee-for-service educational activities.

Acquiring Working Capital

FSEA’s can acquire working capital by using an existing surplus, adding surcharges to external users, or transferring funds from non-federal sources.  Units cannot acquire working capital by increasing rates to internal users.

The FSEA fiscal management must calculate the amount of working capital to be retained by unit.  Example: To calculate the maximum working capital the FSEA is allowed to retain, take an average of two months of operating expenditures over the past fiscal year.

Total Expenses for the fiscal year ending 06/30/yy $150,000.00
Allowable Expenses Calculation ($150,000/12 months*2 months)
Total maximum allowable Working Capital $25,000


Last Reviewed

Last reviewed on 03/20/2024


OMB Uniform Guidance, Subpart E, §200.420 through §200.475

FSEA Authoritative Guidance


Auxiliary Accounting: (352) 294-7236

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