Chargeback Manual

for Internal Chargeback Centers, Facilities, and Expense Pass-Throughs

Introduction

Definitions

Signature Authority

Other related issues:

Expense Pass-Through

Chargeback Centers:

Food Service

Image & Design Center

Facilities:

GAU

Machine Shop

Over the course of time, accounting methods and practices for Chargeback Centers and Facilities operations continue to change and improve. The goal reflected in these changes remains constant, to provide better financial information and to achieve efficiency in operations. The Chargeback Centers and Facilities are accounted for as self-funded, fully cost recoverable, entities and are treated as separate contracts in the Bi-Tech system. Each center may recover actual costs using the proper mark-up rate. Chargeback Centers are accounted for differently than facilities.

A Chargeback Center has the following characteristics:

• provides a service or an activity of corporate-wide benefit for internal convenience
• is organizationally established within its own contract
• requires a charge rate to distribute the total cost of the Chargeback Center
• is accounted for as a distinct fully recoverable cost center

Each Chargeback Center is allocated occupancy and UCAR G&A. Chargeback expenditures applied to the divisions will bear the full entity overhead rate. Occupancy and UCAR G&A are factored into the methodology for determining the mark-up percentage for each Chargeback Center. There are two separate mark-up rates depending upon whether the user is an NCAR or non-NCAR user of Chargeback Center services. The NCAR user receives a reduced rate with the NCAR G&A cost pool funding the difference between the full rate and reduced rate.

Facility Usage Centers have the following characteristics:

• provides a service or specialized activity essential to UCAR's scientific mission
• enhances UCAR's ability to do science
• is organizationally established within a direct funded scientific program
• requires a charge rate to distribute direct costs of Facility activity
• is accounted for as a distinct, direct, cost recoverable center

The Machine Shop is treated as a Facility. For the use of these Facilities, a SUR (System User Rate) charge is assessed to all non-NSF users. All Facility billing rates include overhead.

SUR charges maybe assessed to non-NSF users of ATD aircraft and non-aircraft facilities. In addition, an AMR (Aircraft Maintenance Rate) charge is charged to both NSF and non-NSF users for the variable costs involved in the usage of the aircraft.

Chargeback Center

• provides a service or an activity of corporate-wide benefit for internal convenience
• is organizationally established within its own contract
• requires a charge rate to distribute the total cost of the Chargeback Center
• is accounted for as a distinct fully recoverable cost center

Expense Pass-Through

• actual costs are paid out of one account and later redistributed to another account via a journal entry
• the originating cost center is known at the time of payment but distribution at the time of payment is not feasible or efficient within the accounting system
• does not require a charge rate
• actual costs that are redistributed can be identified per the original document

Facility

• provides a service or specialized activity essential to UCAR's scientific mission
• enhances UCAR's ability to do science
• is organizationally housed within a direct funded scientific program
• requires a charge rate to distribute direct costs of Facility activity
• is accounted for as a distinct direct cost recoverable center

Background:

In order to achieve optimum internal control, all financial transactions entered into the Bi-Tech system need to have an authorizing signature before processing. This is done as a protection for financial resources and to facilitate the spending and budgeting control processes.

To date, the only exception to this policy is the manner in which Chargebacks have been processed. Due to the high volume of internal transactions, it would be unreasonable to require the Chargeback Centers to verify all transactions prior to execution. A certain level of confidence can be assumed in dealing with internal Chargeback Centers that is not present in external transacting. Therefore, in an effort to provide the divisions with some level of protection against unauthorized spending before it occurs and not overburden the Chargeback Centers with excessive signature authority verification, thresholds for verifications have been adopted. Chargeback statistics were obtained along with input from both Chargeback users and Administrators in an attempt to select a reasonable level of signature authority thresholds.

Following are the thresholds to be used in processing Chargeback Center transactions:

The Chargeback Center should verify that any transaction above the dollar limit has been authorized by an appropriate signature. This can be done through the use of the signature authority system accessible at the main Bi-Tech menu (UCSA).

Background:

Expense pass-throughs are being discussed generically. Even though they are not "chargebacks" they still involve the transfer of expenses from one account key to another. The differentiation between a chargeback and an expense pass-through is as follows.

A Chargeback Center:

• provides a service or an activity of corporate-wide benefit for internal convenience
• is organizationally established within its own contract
• requires a charge rate to distribute the total cost of the Chargeback Center
• is accounted for as a distinct fully cost recoverable cost center

Expense pass-through:

• actual costs are paid out of one account and later redistributed to another account via a journal entry
• the originating cost center is known at the time of payment but distribution at the time of payment is not feasible or efficient within the accounting system.
• does not require a charge rate
• actual costs that are redistributed can be identified per the original document

Expense Pass-Through examples are:

- Postage                                             - UPS
- Maintenance                                     - GSA Vehicle

The method of identification for the allocation of costs will differ for each type of expense pass-through and in some cases the transaction volume is high. For example, maintenance has a form that gives a cost breakdown for time spent on the job while UPS has no official chargeback form. UPS has a high transaction volume of small expenses. In high transaction volume cases it is difficult to send the documentation of all charges to all divisions. But wherever possible, documentation of expenses should be sent to the divisions as well as estimates of work or charges being entered on the chargeback forms. In most cases, it is more efficient for the divisions to simply coordinate and retain all original receipts for use of these services and then contact the service center if they have a question. The journal entry to charge the division should have receipt or form numbers whenever possible but must always have proof of the allocation attached. In addition, the expense pass-through postings should all be on the same monthly schedule of posting that chargebacks centers are on. Many of these postings will be accomplished via file download procedures.

JOURNAL ENTRY PROCEDURES

1. On a monthly basis, a summary report of the month's activities is generated by the service center and sent to the Finance Office for input into the Bi-Tech System. This entry will reference the order form number, where possible, so that the divisions can identify the charge when posted to the general ledger.

2. The journal entry backup provided by the charging center includes information such as: order form or some type of proof of basis for allocation, the purchaser’s name and request date, account key and object code to be charged, amount to be charged, and description of work. This is attached to the journal entry and is retained on file by Finance.

3. If the division has questions about their charges, they should contact the service center within the next accounting period.

4. A Chargeback Report can be obtained by logging into Bi-Tech and running a use file. The use file name is USE CHGBAK. By answering the questions, the divisions can retrieve information on chargeback expenses that have been posted to any account key.

Reconciliation of Chargebacks to the General Ledger

The expenses charged to each key should be matched to the various forms or receipts the Divisions have received from the service centers. If you find that you have not received all of the receipts, etc. for the month, contact the service center for your copies. Since there is usually only one of each service center posting in a month, the total general ledger posting to an account key should equal the sum of the total of the receipts or forms that have been received during the month. Thus, the receipts should equal the charges posted to the general ledger. If the charges do not match, please verify that you are trying to reconcile the correct month’s charges. If the amounts still do not match, you should call the chargeback accountant in Finance for further assistance.

Monthly Expense Pass-Through Processing Responsibility Matrix

The Food Service Chargeback Center is responsible for all UCAR Food Services, including the Mesa Lab and the Foothills cafeterias, catering and special functions for both external and internal clients. Food Services does not have a formally-approved internal billing rate. However, several years ago, the Cost Accounting Committee (CAC) approved the markup percentages that are currently being used. The markup percentages for Food Services vary depending upon what type of function is being catered. These rates are based upon actual costs and market price.

CHARGEBACK PROCEDURES

1. Request forms are generated at the user level using the Food Services On-Line forms. These forms include all information pertinent to the event as well as account numbers to be charged or other methods of payment to be used. Additional information should also be included when it is applicable such as agendas and the guest list. Telephone, E-mail, or Fax requests are also honored in order to provide the service on a timely basis, but should be followed up by the completed form. Cost estimates are provided at the initial time of request.
    
2. The contact name on the form represents the official requestor. Obtaining the signature is the responsibility of the official requestor. Any request that is greater than $500 requires an order form and must be signed by an authorized division person and signature authority should be checked by using the Bi-Tech on-line signature authority system (UCSA at the main menu) by Food Services before the order is placed. All discretionary accounts to be charged, regardless of the amount, must have dated signature approval as indicated on the form.
    
3. The Request to Serve Alcoholic Beverages at UCAR form is also generated at the user level. This can be submitted to the UCAR President, NCAR Director, or UCAR Office of Programs Director depending upon division location. It should be approved at least five days before the function and distributed according to the listing at the bottom of the form.
    
4. All requests are assigned an order number and entered into the Food Services database. Changes, additions or other information may be entered at the time of the event. This database is used as the basis for billing information.
    
5. Billings are prepared between the 1st and the 15th of the month for the previous month's events. On a monthly basis, monthly transaction data is generated by Food Services and downloaded to the Finance Office for input into the Bi-Tech System before the last day of the month.
    
6. Information regarding charges for the event is available to divisions upon request. A list of division contact personnel (for any questions on signature authority and the names of the recipients of the division reports or forms), should be retained and used by Food Services.
    
7. Questions about charges should be directed to Food Services for resolution. Questionable charges can be corrected as a normal JE transfer or appear as corrections on the next month’s upload. Corrections should be handled within the following accounting period and should be well-documented.
    
8. A Chargeback Report can be obtained by logging into Bi-Tech and running a use file. The use file  name is USE CHGBAK. By answering the questions, the divisions can retrieve information on chargeback expenses that have been posted to any account key.

Monthly Chargeback Processing Responsibility Matrix

Background:

The Image Center provides several services:

• black and white copier service
• color copier service
• photo mechanical transfer (PMT) service
• print buying

Design Center provides two type of services:

• graphic services for development and creation of graphics for scientific journals, technical papers, internal publications and other items that require graphic art work
• photographic services that provides photography for scientific field projects, internal publications and technical papers

The Image & Design Center uses internal billing rates that are informal chargeback rates.
 

CHARGEBACK PROCEDURES

1. A customer request for work is received, a job form is filled out and a job number assigned to the order form . If the cost of the order is greater than $250, an order form must be signed by an authorized division person and signature authority should be verified by utilizing the Bi-Tech on-line signature authority system (UCSA at the main menu) by the Image & Design Center before the order is placed.
    
2. The order form includes billing information such as: the purchaser's name and request date, account key and object code to be charged, estimated cost of work and cost breakdown, description of work and authorizing signature line. As order forms are completed, one copy is retained on file by the Image & Design Center and another is given to the purchaser, if requested.
    
3. The order is entered into the Image & Design Center database to track the chargeback information.
    
4. Upon completion of the work, job cost information is entered on the order form and into the database system by job number. The finalized order form with final cost information is distributed to the divisions if the cost is in excess of $100.
    
5. On a monthly basis, transaction data generated by the Image & Design Center will be downloaded to the Finance Office for input into the Bi-Tech System. This entry references the order form number, which enables the divisions to identify the charge when posted to the general ledger. In addition, since there is a different markup percentage applied depending on whether the user is NCAR or non-NCAR, the Copy Center should provide Finance the breakdown of charges between NCAR and non-NCAR customers.
    
6. Questions about charges should be directed to the Image & Design Center for resolution. Questionable charges can be corrected as a normal JE transfer or appear as corrections on the next month’s upload. Corrections should be handled within the following accounting period and should be well-documented.
    
7. A Chargeback Report can be obtained by logging into Bi-Tech and running a use file. The use file name is USE CHGBAK. By answering the questions, the divisions can retrieve information on chargeback expenses that have been posted to any account key.

Monthly Chargeback Processing Responsibility Matrix

Background:

General accounting unit (GAU) rates are charged for both external and internal users to allocate costs for the use of CRAY computer time. Only those users who are not sponsored by NSF are charged for GAUs. The revenue recovers the non-NSF costs of operations. Institutions from all over the world, including universities, governmental agencies, not for profit agencies and commercial entities rent computer time for scientific purposes. Like all facilities, GAU usage provides a service or activity essential to UCAR's scientific mission and enhances UCAR's ability to do science and it provides a unique capability. The GAU billing rate is a formally calculated rate and is included in UCAR's annual rate submission for NSF approval.

CHARGEBACK PROCEDURES

1. GAU usage time is recorded by the system as the usage occurs. Users may receive periodic reports by request or view their GAU usage only by use of the "charges" command on the SCD system.
    
2. SCD must receive prior authorization to charge for GAU usage. The authorization for external accounts is a purchase order or credit card, or wire transfer. The authorization for expense transfers to account keys overseen by other divisions is a memo or e-mail from a person with signature authority from the requesting division.
    
3. Once a month, internal GAU usage is charged via a journal entry and outside GAU usage is billed directly by SCD. The expense allocation amount is derived from the SCD Billing Report that is sent from SCD to Finance.
    
4. Revenue from GAUs are collected in account key 139201 and spent out of 139200. Per the UCAR/NSF Cooperative Agreement, UCAR must receive prior approval from NSF for the expenditure of Facility revenue.
    
5. A Chargeback Report can be obtained by logging into Bi-Tech and running a use file. The use file name is USE CHGBAK. By answering the questions, the divisions can retrieve information on chargeback expenses that have been posted to any account key.

Monthly Chargeback Processing Responsibility Matrix

Background:

The function of the Machine Shop is to provide specialized mechanical and component fabrication for scientists and engineers in development and operations of field program activities. Like all facilities, the Machine Shop provides a service or activity essential to UCAR's scientific mission and enhances UCAR's ability to do science and it provides a unique capability. The Machine Shop has pre-approved internal billing rates determined by an NSF-approved methodology.

CHARGEBACK PROCEDURES

1. The machine shop supervisor prepares a written estimate of the costs of the proposed work on a project. If the cost of the order is greater than $500, an estimate form must be signed by an authorized division person and signature authority should be checked by using the Bi-Tech on-line signature authority system (UCSA at the main menu), by the Machine Shop before the order is placed.
    
2. The estimate form includes billing information such as: the purchaser's name and date, account key, description of the job and total estimated cost of the job. As estimate forms are completed, a copy is made and one copy is retained on file in the Machine Shop and the other is retained by the division contact person.
    
3. The Machine Shop hours worked will be tracked daily or weekly through the use of a database program. Material and supply costs can also be tracked by entry into the system. Since there is a different billing rate depending upon whether the project is NSF or non-NSF, the Machine Shop must track sales using this criteria. This information should be determined at the start of the project and factored into the estimate.
    
4. A budget is entered into the software and monitored by machine shop personnel. Percentage of completion on a project needs to be weighed against the estimate. If it is determined that the estimate is too low or the project has overrun the estimated costs, a new estimate must be signed by the administrator before additional charges can be entered into the system.
    
5. The Machine Shop will furnish the Finance Office with monthly transaction data to be uploaded into the Bi-Tech System.
    
6. Questions about charges should be directed to the Machine Shop for resolution. Questionable charges can be corrected as a normal JE transfer or appear as corrections on the next month’s upload. Corrections should be handled within the following accounting period and be well-documented.
    
7. A Chargeback Report can be obtained by logging into Bi-Tech and running a use file. The use file name is USE CHGBAK. By answering the questions, the divisions can retrieve information on chargeback expenses that have been posted to any account key.

Monthly Chargeback Processing Responsibility Matrix