As you are calculating a service rate all costs must be considered. Costs recovered by a Banner fund type 3E service activity charge must include only those costs which are directly related and allocable to the service activity, allowable under applicable regulations, and reasonable in relation to the service performed. Non-personnel costs and salaries/wages must be posted to the service fund to be included in rates charged to internal customers. Examples of unallowable costs can be found here.
The University of Illinois System has a responsibility to ensure proper treatment of costs (i.e., service rate charges). Non-compliance can lead to audit findings, fines, and potential refunding of service charges.
While an expense may be allowable for your 3E fund to incur, it must be directly beneficial to perform the service. For example, including costs from other lines of service to reduce an over-recovery for another service activity is not allowable. Only expenses that are directly related to the service activity can be included in your rate. Using activity codes and program codes assist with tracking expenditures by line of service.
Monitoring all expenditures regularly to ensure proper matching of expenses with revenue is a recommended best practice.
Here are some tips to help you record costs correctly:
- Submit a request to uas@uillinois.edu to have default Organization and Program codes assigned to your self-supporting Fund, so that those fields will automatically populate when you enter the Fund code into a Banner page.
- Create a reference list of valid C-FOAPAL strings used by your unit. Maintain this list centrally and update it regularly.
- When entering a C-FOAPAL string into a Banner page, verify that the first three digits of the Program code match the first three digits of the Organization code. Also, check that the first three digits of the Fund title match the first three digits of the Organization and Program codes.
- If using a “shadow system” to keep track of transactions, the data must be properly and accurately entered into Banner. Also reconciling a shadow system to Banner regularly is recommended.
- Check at least weekly to verify that revenue and expenditures are posted to the correct Account codes and perform other reconciliation tasks. This will allow time to make any necessary corrections before the monthly reports are prepared and distributed.
- Perform a labor redistribution in Banner to correct labor expenditures that were posted to an incorrect C-FOAPAL.
Contact
If you have questions about which costs are considered to be directly related to the service and allowable to be included in the rate calculation feel free to consult System Government Costing’s “Who to Ask” list to find an expert who can help.
