Recharge Standard Operating Procedures

 

SUBJECT:

Recharge/Service Center Transfers

SOURCE:

Cost Accounting, Financial Management Services

DATE ISSUED:

January 2016  

DATE OF LAST REVISION:

 

N/A

RSOP NO:

7.0 

RATIONALE:

To provide guidance on when a transfer in or transfer out is permitted within a recharge/service center (66) account.

RSOP:

Transfers In

The recharge/service center (66) account can receive a subsidy through a transfer of funds document to help cover expenses. However, the fund balance in the recharge/service center (66) account must remain at breakeven. Once funds have been transferred into a recharge/service (66) account, they cannot be transferred out for any reason other than what is cited below in the Transfer Out section.

 

Transfers Out

Transfers out of recharge/service (66) accounts are not allowed, with the exception of a transfer out to the organization’s dedicated renewal and replacement (92) account, equal to depreciation on assets related to the recharge activity.

 

Recharge/service center units that have capital assets should annually transfer out cash in the amount equal to depreciation expense. The cash should be transferred from the recharge/service center (66) account to the dedicated renewal and replacement (92) account for future capital purchases using a transfer of funds document. Please include a detailed description on the KFS Transfer document that includes the depreciation period (i.e., “Transferring depreciation expense for FY 2015”).

 

Recharge/service center units that have debt service should contact cost accounting.

 

Exceptions to this standard operating procedure require the approval of the Chief Accountant.

DEFINITIONS:

Debt Service:  Cash that is required to cover the repayment of principal and interest on bonds and notes issued by the university.

 

Depreciation Expense: Equal allocation of the cost of a capital asset on the balance sheet to the income statement during the periods in which the asset is used.

 

Renewal and Replacement Account: Accounts used to set aside funds for replacement of renewable property (typically capital assets or desktop computers).

 

Recharge Activity: An activity that furnishes goods or services to another Indiana University department for the convenience of the university and charges a fee directly related to, and not more than the allowable cost to provide the goods or services.

CROSS

REFERENCE:

 

OMB Uniform Guidance (PDF) "Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards"

 

RSOP #3: Including Annual Depreciation Expense in the Recoverable Rate Calculation

RESPONSIBLE

ORGANIZATION:

 

Organizations that bill other Indiana University departments for goods or services