Review, Approval, & Records Retention

REVIEW AND APPROVAL OF RATES FOR EXISTING SERVICE DEPARTMENT

Annually, each recharge center with sales greater than $50,000 must provide the Cost & Compliance unit with a report that relays the following information:

• Financial reports showing reported expenditures and revenues for the year;
• The amount billed to sponsored agreements;
• The total volume of activity for the fiscal year;
• The amount of any over- or under-recovery; and
• The detailed rate schedule and a reconciliation of cost to rates.

Cost & Compliance will review and monitor the billing rates for all recharge centers with sales greater than $50,000.  At the end of the fiscal year, recharge centers should submit their calculations to Cost & Compliance for review and approval.  Judgements will be made as to whether total billings for sales and services are reasonable compared to the costs of operation.  The rate calculations will be reviewed to determine if all unallowable costs are being excluded.

Recharge centers with sales less than $50,000 per fiscal year are not required to submit their rates for approval.  These small-scale activities, however, are still responsible for proper rate development.  Cost & Compliance is available for consultation regarding such activities, and will periodically check with the departments on such known operations.  They may also be audited by external or internal auditors.

CONSEQUENCES OF NONCOMPLIANCE WITH RATE DEVELOPMENT GUIDELINES

The correct development of recharge center rates is important to the University for the following reasons:

• To ensure the fairness of rates charged to all users;
• To maintain compliance with the University’s Cost Accounting Disclosure Statement; and
• To regulate charges to sponsored agreements by ensuring that amounts charged are allowable and do not exceed the cost of the service.

Recharge centers that provide services to sponsored agreements are subject to review by external auditors.  External auditors can recommend the disallowance of charges to sponsored agreements.  Amounts disallowed because of the failure to comply with proper rate development guidelines will be the responsibility of the Dean/Director of the recharge center.

Common reasons for disallowances are:

• Inadequate rate documentation;

• Failing to maintain current equipment depreciation schedules;
• Failing to separately identify the expenses included in the calculated user rates from normal departmental expenses;
• Failing to document clearly the products/services provided on bills to users; and
• Failing to identify the user’s source of funds at the point of purchase.

RECORDS RETENTION

Recharge centers are subject to audit to determine compliance with the University’s Cost Accounting Disclosure Statement and to test the validity of charges to sponsored agreements.  Therefore, recharge center activities must be adequately documented and records maintained to support expenditures, billings, and rate development.  Financial records, supporting documents, statistical records, and all of the records pertinent to a recharge center’s activity must be retained for at least seven years, unless a litigation claim or audit is started before the expiration of this period.  In these cases, records need to be retained until litigation, claims, or audit findings are resolved.