Does your unit generate revenue from technical testing agreements (TTAs)? If so, see below for a few accounting guidelines to keep in mind:
- If the same technical testing service is sold to both external customers and sponsored projects (i.e., grant funds), then an appropriate amount of overhead must be assessed to the external customers to ensure that they are not given preferential pricing when compared to sponsored project customers.
- If there are any unrelated business income tax (UBIT) implications from the TTA activities, then the applicable UBIT reporting guidelines must be met.
- A unique self-supporting fund must be established to properly account for the TTA activities.
- All billing and receivable activity for technical testing services sold to external customers should be handled via the Banner Accounts Receivable (Banner AR) system.
- Revenue from the sale of technical testing services should be credited to the proper revenue account code as outlined below:
- TTA revenue generated from internal customers (including grant funds) should be credited to account code 307851.
- TTA revenue generated from external customers (up to the amount of the internal rate) should be credited to account code 307852.
- TTA revenue generated from external customers which exceeds the internal rate (i.e., the upcharge to cover overhead costs) should be credited to revenue account code 307921.
- Self-supporting funds which upcharge external customers for overhead costs must be assessed an equivelant amount of administrative allowance expense. This assessment will be charged to expense account code 198590, with the amount of the charge equaling the amount of revenue that was collected within revenue account code 307921.
- The offsetting credit within this administrative allowance assessment will be recorded to revenue account code 308908 on an administrative allowance C-FOAP managed by your applicable university’s budget office.
- The Banner transaction to post this overhead assessment can be completed either: (1) manually via a unit-generated journal voucher or (2) automatically via UAFR’s Allocations and Assessments (ALAS) system.
For further details, see the recently published policy regarding this topic in the following link: 22.3 Management and Accounting for Facility Use Agreements (FUAs) and Technical Testing Agreements (TTAs).
Contact
If you have any questions related to this topic, reach out to the applicable subject matter experts within the Self-Supporting Funds section of UAFR's Who to Ask list.
