What is a service center?

The Office of Management and Budget Circular A-21 defines service centers (recharge centers) as organizational units, or activities within units, that charge for goods or services provided primarily to other internal university operations or units, but also potentially to users external to the University. Any unit or activity established for the purpose of, or participating in, supporting internal or external research objectives through billing to federal or federal flow-though funds for goods or services provided may be a service center. Examples include, but are not limited to, computer services, copy services, lab analysis services, research animal care services, etc. If your operations meet these criteria, click here to view the Service Center Policy.

What are the different types of service centers?

How do I establish a service center?

Units requesting a new service center cost center account must complete a New Cost Center Request Form, available on SAPPHIRE. Service centers with revenues less than $10,000 in fereral funds, unless otherwise requested, do not need to submit budget information requested in this policy to Accounting. All other service centers that charge UNL departments or grants are expected to follow the Service Center Policy guidelines but are not required to submit their rates. If you are requesting a revolving cost center for non-service center activity, please submit a statement that the new revolving cost center will not be used for service center activity.

Requests for new service centers with estimated revenue greater than $10,000 to federal grants must complete the Service Center Questionnaire, which includes the following information:

1. Detailed description of the proposed goods or services offered.
2. General users of the goods or services and the types of funding sources (i.e., general funds, grants, clinical fees, general public) they use to make the purchase.
3. Justification for the service (i.e., convenience, cost, control, or lack of other providers).
4. Rate Schedule including:
• Documentation as to how the rates were developed.
• Rate period (e.g., semi-annual, annual, multi-year, etc).
• Explanations for items included in this calculation.
• Do you charge depreciation of actual cost on items greater than $5,000?
• Are you charged rent?
• Do you receive indirect cost funds (departmental funds) to help cover costs?
• If you charge different rates for UNL departments, grants, or related parties vs. third-party groups, please describe your rate setting methodology for each group.
5. Provide a Detailed Budget Schedule for the first accounting cycle (usually a fiscal year).
6. How will over charges be detected and corrected on a yearly basis?
7. List of capital assets and the associated depreciation incorporated in user rates.

How do I record billing on my service center?

Normally you should record the debit in contractual services GL's 526900-526999 then record the credit on the service center in 592600-592691 (usually 592690).

How do I record yearly depreciation on my service center?

Whenever you transfer the depreciation over to the reserve cost center based on the depreciation in your rate schedule, use the 599212 on both the parent and the child reserve cost center.

How do I make a transfer of surplus on external sales on my service center?

If you have external sales that you make a profit on (over your break even rate) use the same revenue account (4xxxxx) that the money originally came in on to transfer to the reserve cost center. If you have many of these transactions, you should split the revenue when it is originally received to record the break even revenue in the parent and the profit portion in the reserve cost center.

How do service centers handle the internal vs. external sale of equipment?

The State of NE and the University require that all assets be offered for sale internally before being sold externally. This policy is in place for the best interest of the overall University as we are not here to be making money off each other but to be helping each other in the overall goals of the University. If it is found that there is not a need internally for an asset, then the item may be sold externally. These types of sales are accounted for differently.

If internal sales exceed the remaining book value of the asset, the excess revenue received on the asset must be placed back into the Service Center's operations in order to offset the future rates.

Whenever equipment is sold, the value of the equipment should come back to the GL account it was purchased against rather than as revenue. If it is an internal sale, it would come back to the overall service center parent where it would be used to offset the next year's rates. If it is an external sale, it would come back to the service center reserve cost object to be used to purchase future assets.

Note: These procedures for the sale of equipment internally do NOT apply to those items that were initially purchased by the Federal Government. This equipment will NOT be allowed to be sold internally at a rate higher than its book value. Equipment that was purchased with Federal funds should be marked as such on SAP therefore helping departments and accounting know that this item requires special procedures.

How do I record inventory for resale on my service center?

Inventory for resale by service centers should be acquired in such a manner that costs are minimized. Since bulk purchasing can result in significant price reductions, the quantity to purchase should be carefully evaluated using historical sales activity. Quantities expected to be in inventory in excess of fourteen months should be evaluated to ensure that the costs to acquire and to carry the inventory do not exceed the savings of purchasing the item in bulk. Bulk purchases may be made when the evaluation indicates that they are cost effective.

Service centers with purchases of inventory in excess of $5,000 must perform a physical inventory of these goods at fiscal year end. A copy of the inventory report should be forwarded to Accounting where a journal entry will be prepared to transfer the cost of the year end inventory from the expenditure accounts to the correct inventory asset account.

How do I record prepaid revenue or expenses on my service center

At the end of the year, any outstanding prepaid revenue or expenses with outside vendors, including students, outside companies, etc., should be identified and sent to Accounting. A journal entry will be prepared to transfer the cost of the year end revenue or expense from the revenue or expense account to a prepaid asset account.

Prepaid revenue or expense with an internal vendor should also be identified at the end of the year and sent to the Service Center Committee. They will note the balance to show why revenue and expense do not equal for the year.

Do I need to collect sales tax on my service center activity?

If you provide services to entities outside of the University, you need to collect sales tax. Click here for more information.

Do I need to keep track of time charged to my service center?

If your operations are billing out for services preformed, it is necessary to establish procedures to track your time. This is very important in order to show what expenses are incurred for the work you are doing. You may base your rates on the time you work or on a per unit basis. In either case, you need timesheets to provide the necessary documentation of the time you spent performing the services. The time that is documented on the timesheets should be properly charged to your service center cost object. It is also important to keep time sheets if your payroll is split-funded between two or more cost objects to document that you are actually devoting the same percent of time to the service center as is being charged to the service center cost object.