Recharge Guidelines

The purpose of this web site is to provide guidelines for establishing or revising recharge rates for service units who provide services or goods to other University of Michigan (UM) units and/or to entities outside UM.

If you are a service unit who charges others for your goods or services, your recharge rates must be reviewed and approved by the Office of Financial Analysis and Service Unit Billing (SUB) Loader Access must be obtained from Financial Operations.

Table of Contents:

	Overview of Recharge Rate Process
	Why is this process necessary?
	Definition of a "service unit"
	Procedures for submitting a request to establish a new or updated recharge rate
	How the approval process works
	Responsibilities of departments involved in the recharge process:
	Service unit Division of Research and Development Administration (DRDA) Financial Operations Financial Analysis
	Forms & Files:
	Recharge Template (MS Excel worksheet to help you complete your recharge rate proposal)
	Recharge Template Instructions (Written instructions for completing your recharge rate
	template)
	Depreciation Transfer JU Sample (to be submitted to Financial Operations when transferring depreciation. Actual form can be found on the Financial Operations website)
	Recharge Vendor ID Request (to be submitted with new recharge requests or updated requests that do not yet have a vendor ID assigned)
	Guidelines for Service Units  (text version of the guidelines presented in this website)
	Guidelines for Room Rentals
	To submit request and or questions: recharge@umich.edu
	Who to contact for more information

Why is this Process Necessary?

	OMB Circular A21 requires that "charges for service operations may be included as direct costs of sponsored agreements, provided such items are consistently treated …and charged under a recognized method of computing actual costs, and conform to the generally accepted accounting practices consistently followed by the University." A process must be in place to ensure that as an institution we are in compliance with A21. http://www.whitehouse.gov/omb/circulars/a021/a021.html
	This process also is intended to review rate charges to outside markets to make sure that the University is not unfairly competing due to its tax exempt status.
	This review process aids in the determination of whether any revenue from outside the University, which is in excess of costs, is taxable by the Federal government as unrelated business income.

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Definition of a service unit

A service unit provides services or goods to other University units or to various activities within its own unit. The costs for providing the services or goods can be easily and accurately identified and can be billed using an approved rate per unit. This will normally involve recording the costs and recharge revenue in the Auxiliary - Internal Service Fund.

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How the Approval Process Works:

The Office of Financial Analysis will review the request and determine if: The request is complete and understandable. The department chair or comparable administrator signs the request. Procedures are consistent with University policy. Services are consistent with federal regulations. Rate computations are complete and relate to actual costs. The rate is reasonable. It may be necessary to contact the unit for more information. Include information on prior rate approvals.

If approved, the Office of Financial Analysis will: Notify the unit with an approval memorandum. Provide Financial Operations with a copy of the approval memorandum. The service unit should coordinate their billing process with Financial Operations. Advise the requesting unit to obtain an Auxiliary Fund chartfield combination that will be used for charging the operating costs and receiving the recharge revenue. The request should be submitted to Financial Operations in writing.

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This page was last modified January 25, 2008