Purpose

To ensure that the refund of credit balances to students is performed in accordance with federal regulations, commonly called Title IV and administered through the United States Department of Education.

Policy

The policy deals with accounting, record keeping, and reporting by post secondary educational institutions for federally funded student financial aid programs. Information about these regulations can be found at the U.S. Department of Education website.

Business Affairs will not give immediate refunds to students when there is a credit balance on their student revolving account. The Banner system will be used to process not only financial aid disbursements, but also to create refund checks. This will guarantee the accuracy of the refund checks.

All refund checks will be mailed to the current mailing address on the student's record at the time the check is printed unless direct deposit has been established through OSU Online Services. The student is responsible for ensuring the mailing address is accurate. Students wanting checks to be mailed to alternate addresses will need to enter those addresses as their current mailing address at the time the refund check is issued. Checks will not be available for pick up in person.

Receiving a refund check does not mean that a student has a $0 balance in their account. The students receiving refund checks may still owe the University money. This is because federal financial aid cannot be applied to non-allowable (not institutionally required) charges, as well as any charges incurred prior to the current financial aid award year.

Procedure

If a student is issued a check in an amount less than the total balance due on their account, they may sign the check over to OSU and it will be applied to their account. This cannot be done automatically.

If the difference between a student’s account balance due and the check amount is less than $100, the student may use the check to pay the balance of the account. The cashier’s will give the remaining balance back to the student in cash.

If the student’s refund check amount is more than $100 in excess of the balance due on their account, the student will not be able to use that refund check to pay off the balance of their account. The student will need to take their refund check to their bank to negotiate it so that the student can then pay their OSU account with a personal check or cash. The cashier’s office does not keep sufficient cash on hand to disburse more than $100 in change for such a transaction.

To avoid unnecessary delays, students should review their account on-line at the Students Online Services website. Students should look for transactions coded with the description "Tuition/Scholarship Refund" for the current term. This indicates that a refund check has been issued to the student.

There are three options available to receive a refund:

1. Request through e-mail to refund@oregonstate.edu requesting a refund. Include your name, University I.D. number and date of birth.
2. Request a refund check in person at the Cashier’s window in Kerr Administration Building.
3. Request a refund through US Mail. Send a written request which includes the student name, University I.D. number and date of birth to:

Cashier’s Office Refunds
Oregon State University
Business Affairs
PO Box 1086
Corvallis, OR  97339-1086

Telephone requests will not be accepted.

Additional information can be found at the website for Student Finance.

Oregon State University uses guidelines maintained by the Procurement and Contract Services (PaCS) Office to assess when someone is an Independent Contractor.  An Employee versus Independent Contractor Determination form must be completed whenever OSU contracts with an individual.

Reference: PaCS 401: Contract Basics

See the Oregon State University policy #101-002 Contracting with Current and Past OSU Employees located in the Procurement and Contract Services (PaCS) Manual.

Purpose

To ensure that all gift certificates purchased by Oregon State University have been authorized in advance and exhibit appropriate use of university dollars.

Policy

All gift certificates purchased with OSU funds must be authorized in advance.  There will be no personal reimbursements for gift certificate purchases.  Gift Certificate purchases cannot be charged to direct pay vendors, including the OSU Bookstore.

Procedure

OSU Units must submit a Vendor Payment Request form to purchase gift certificates.  Once the appropriate signatures are obtained, enter into FIS Banner on FAAINVE as “pick up”.  Send the form to Business Affairs to review and process a check payable to the vendor.  The check and a copy of the request can then be taken to the vendor to receive the gift certificate(s).

Gift certificates to employees (faculty, staff, or student) are considered a cash equivalent. The value of the gift certificate is reported as taxable in the Payroll system. Use Account Code 20168 for gift certificate purchases which will be given to employees.  See FIS 1402-13 Employee Recognition for information on approved funding sources for these awards.

OSU Foundation will not process requests for direct payment or reimbursement (personal or direct reimbursements) for gift certificate purchases or other cash equivalent gifts or awards.  Gift certificate expenses paid by the University are reimbursable through the FS Index Reimbursement System using unrestricted funds.

Account codes for Gift Certificates:
20168 Awards – employees
20169 Awards – non-employees
20190 Testing Group Incentives – volunteers
25140 Research Subjects – volunteers

The Oregon State University Telecommuting Policy (pdf format) is located on the Human Resources website.

Fiscal Operations Manual
Section 1402: Expenditures
Effective: 10/15/2008
Revised: 5/9/2013

Fellowships, Scholarships, and Student Payments information is available at FIS 410-11

Purpose

1. To provide guidelines for requesting, reviewing and approving existing, new or revised fees for all university units who provide goods or services to other units, sponsored projects, or external sources.
2. To provide standards to achieve compliance with government regulations and Oregon University System policy for fairly assessing and recovering the costs from each benefiting user.
3. To ensure consistency in the accounting and application of all recharge activities; conforming to Generally Accepted Accounting Principles (GAAP).

Background Information

As a research intensive university, OSU is subject to many federal regulations including those which affect how the university accounts for recharge activities.  OMB Circular A-21 Cost Principles for Educational Institutions established principles for determining costs applicable to grants, contracts, and other agreements.  It provides guidance of what will be considered an acceptable direct or indirect charge to a Federal agreement, what are unallowable costs, and the proper method for preparing the University’s facilities and administrative (F & A) costs proposal. 

OMB Circular A-21 also requires additional criteria:

1. Adherence to four Cost Accounting Standards, including CAS 502 “Consistency in allocating costs incurred for the same purpose by educational institutions”.
2. Preparation and approval of a Disclosure Statement (DS-2) for the university’s practices and policies, including recharge operation activities.

Procedure

Recharge activities consist of all operations which provide services or supplies to others and charge a fee for the recovery of the cost incurred.   These may include charges to users external to the university community.   Fees may not be established solely for the purpose of generating discretionary departmental income.  Academic and administrative units may engage in the direct sale of goods and services only when those goods or services are directly and substantially related to the mission of the University.  See FIS 1401-02 “Sales of Goods and Services” for definitions of internal vs. external customers and sales as related to the mission of the University.

This policy contains these sections:

1. The Fee
2. Fee Book
3. Internal vs. External Sales
4. Record Retention
5. Financial Accounting Structure
6. Fee Calculations
7. Responsibilities

1.  The FEE
The fee, or billing rate, is per unit of activity and charged to recover some or all of the costs associated with producing the goods or providing services.  It is recommended that the number of different billing rates be kept to a minimum.  Try to avoid establishing fees for small services that are insignificant in terms of the total operation.  The record keeping that would be necessary to justify the charges generally far exceed any benefit that would be gained.   

The following key rules must be considered when developing an internal or external fee:

• All users of the service must be accounted for. 
• Fees must be consistently charged for the service rendered.
• If a fee is not charged to a class of customers or charged at a reduced rate (i.e. student projects), then this amount must be imputed during the annual fee calculation.   This exception of not charging the full fee is only allowed if the service is recorded in the appropriate E&G index, such as “instruction”.  See “Financial Accounting Structure” section below for details.
• Any subsidization of a service should be approved by the college dean or appropriate VP.  See “Fee Calculation” section below for details.
• Administrative support costs [such as accounting, purchasing, general computer support, business center support], and building/land operations, maintenance, utility costs cannot be charged (or included in a fee) as a direct charge to grants/contracts.
• Internal fees can not include charges for use of OSU buildings, land, or infrastructure unless those facilities are owned/operated by a self-support Auxiliary Enterprise and the charge is from that auxiliary. 
• Grants, contracts, and SWPS projects cannot be charged a higher fee than any other internal or external user.   Charges to these activities may be made only when there is a direct relationship to the project.
• Fees to external customers may not be less than for those of internal customers; although external fees may be greater and market pricing may be considered in setting the fee.
• All requests for new fees must be approved by the Internal/External Fee Committee before they can be applied.  
• The fee in effect at the time of service is what is charged. 

2.  FEE BOOK
Recharge activities require approval and annual posting of the fee in the appropriate university fee book. Fees are updated each spring for use during the next fiscal year.  All fees are reviewed by the university Internal/External Fee Committee (I/EFC).  Fees which are charged to external customers must go through an annual public hearing process.  External fees can not be added or adjusted mid-fiscal year. Internal fees can be adjusted mid-fiscal year with I/E Fee Committee approval and justification, such as for a new service or increase cost of a supply.

3.  INTERNAL vs. EXTERNAL SALES
Internal sales are non-cash transactions for goods and services necessary to meet the mission of the university. These may be between departments and units; or charges to externally funded grants/contracts or state-wide public service projects.  Internal sales are processed using journal vouchers.  These should be processed monthly (at a minimum quarterly) by the unit providing the service.   See Journal Vouchers FIS 1107.

External sales are cash transactions for goods and services sold to students, faculty, staff, and the public.   The good or service is substantially and directly related to the university’s instructional, research, or public service mission.   Transactions involving 9xxxxx Agency funds are considered transactions with external customers even though processed with a journal voucher.

This policy does not apply to sales of residual products from research projects (such as wheat, potatoes, sheep, etc.), tickets for theater and athletic events, workshop registration fees, or instructional class lab fees for supplies.

See exhibits FIS-Ex003-07 “Internal vs. External Revenue” and
FIS-Ex003-12 “External Funding Approval Matrix” for further information.

4. RECORD RETENTION

For those units who have internal university sales, documentation is to be maintained for eight(8) years. External sale documentation should be kept for three(3) years.   Documentation includes:

• Work papers showing how the fee was calculated; including job descriptions of employees whose salary is in the fee.
• Record of all customers/users of the service, even if not charged.
• Billing records that identify the service provided; amount charged and received.

5.  FINANCIAL ACCOUNTING STRUCTURE
The financial accounting for recharge activities is determined by the customer-base and dollar amount or volume of activity.   Some recharge, such as departmental charges for use of the fax and copy machines, are managed in the departmental index.  Other activities require a separation into other fund sources (i.e. 05xxxx Designed Operation funds, 09xxxx Service Center funds, and 1xxxxx Auxiliary Enterprise funds).  The recovery (income) from the recharge activity must be recorded in the same Index and fund as the costs.   Recharge activities can not be operated out of gift, OSU Foundation, Agricultural Research Foundation (ARF), or grant/contract funds.

To determine the appropriate financial structure, review the following definitions.  A decision matrix is provided at: FIS-Ex003-06 “Recharge Activity Accounting Structure”

Additional information: FIS-Ex003-08 “Self-sustaining Activity.”

Redistribution of expense
A redistribution is where all or part of the cost is moved from the purchasing index to another index of an original expense paid to an outside vendor.   Generally these purchases for goods or services are made in bulk for greater buying leverage.  The Banner document code processing the original expense is referenced in the redistribution journal voucher.  The account code for debit and credit are identical to match the original expense transaction.   Since this is a redistribution of actual expenses, there is no fee listed in the university internal fee book.  This is not a recharge activity. 

Department allocation of operating expense
Costs for departmental copiers and fax machines are in this category.  The fee and documentation is approved at the College/VP level (business manager).  The fee must be reasonable and is merely to recover the cost of supplies (paper, toner) and equipment rental; no salary.  The fee is not required to be in the university internal fee book, however, a record of all users and charges must be retained in the unit for five years.  Example:  photocopier charges at five( 5) cents/copy.

Departmental Cost Center (DCC)
The activity being recharged is integral to the instructional or departmental research function of the unit as identified by the Index’s Program Code and Ed & General fund 001100 or State-wide Public Service 03xxxx funds.  Services are provided to other units of the university or direct charged to projects, grants, or contracts.  The majority of the recharge is from internal sales. There should be minimal external cash revenue. 

All costs to be recovered must be contained in an identifiable Index for review of fee structure. It may be necessary to use Activity codes to further separate the costs.  The fee may include all direct costs, including labor.  Expenses that can NOT be included in the fee: facility (buildings/land) utilities, operations, maintenance; capitalized equipment purchases or replacements; equipment depreciation; business center support costs; department overhead or university indirect costs.   The fee must be approved by the university Internal/External Fee Committee (I/EFC) and listed in the university internal fee book.  See “Fee Calculation” section below for details.

Reference: FIS 1403-02: Education & General (E&G) and Statewide Public Service (SWPS) Budgeted Operations

Designated Operation (DO)
A Designated Operation is a self-sustaining activity related to instruction and public service where 80% or greater of the revenue is derived from external sources. 

The following activities are included:
  Non-credit instruction portion of field trips and international education
  Community Education (non-credit conferences, workshops, seminars)
  Public Service (testing services)

A separate 05xxxx fund and index is established for the activity.  All costs and revenues of the service are recorded in this fund.  Costs include direct costs, departmental administrative costs (up to 15% as allowed by policy and documentation) and university overhead [currently 8%].   Facility, capital equipment purchases, or depreciation can not be included in the calculation of the fee.  OUS carry-forward rules apply.  

With the exception of workshop registrations, the fee must be listed in the university external fee.   If any services will be provided to internal customers, the fee will also be listed in the university internal fee book. See Designated Operations policy FIS 1403-03 for details.

Service Center (SC)
A Service Center is a self-sustained activity which provides goods or services to the academic university community.  No more than 20% of revenue may be from external sales.

A separate 09xxxx fund and index(s) is established for these activities.  All costs and revenues of the service are recorded in this fund. Costs include direct costs, equipment depreciation, building maintenance, administrative costs of the service center unit, and university overhead (if charged). Capital equipment purchases and facility costs not direct charged to the service center can not be included in the fee calculations. OUS restrictions on working capital and reserve funds apply.  The fee will be listed in the university internal fee book.   If any services will be provided to external customers, the fee will also be listed in the university external fee book. See Service Center Operations policy FIS 1403-04 for details.

Auxiliary Enterprise (AUX)
An Auxiliary enterprise is a self-sustaining unit which provides goods or services primarily to students, faculty, and staff as individuals.  It charges a fee directly related to, although not necessarily equal to, the cost of the goods or services.   The general public may be served incidentally by auxiliary enterprises.

A separate 1xxxxx fund and index(s) is established for these activities.  Expenditures include direct costs, equipment and building depreciation, administrative costs of the auxiliary unit, operations and maintenance, and university overhead.   OUS restrictions on reserve funds apply.  The fees will be part of Academic fee books and/or listed in the university external/internal fee books, as appropriate. See Auxiliary Enterprise policy FIS 1403-05 for details.

Account Codes commonly used for recharge activities
External cash revenue – 06xxxx sales and services
Internal Journal Voucher income credit – 09xxx internal sales
            [use on 05xxxx DO, 09xxxx SC, and 1xxxxx AUX funds only]
Internal Journal Voucher income credit – 79xxx internal reimbursement
            [use on E&G and SWPS funds]
Internal Journal Voucher expense debit –
            24617 lab testing services
            24602 photocopies
            21008 animal care
            24503 data processing service

6. FEE CALCULATION

    a.   INTERNAL FEE
Regardless of the financial accounting structure (Ed & General, State-wide Public Service, Designated Operations, Service Centers, Auxiliaries), all internal recharge fees must be calculated using (1) actual allowable costs only, (2) measurable units of goods or services, (3) 100% of expected customer usage, (4) adjustment for prior year over/under recovery.

            Billing Rate (Fee) = Budgeted operating costs +/- prior year adjustment
                                             Expected units of activity (customer base)

Allowable costs

1. Salaries and fringe benefits (OPE) of personnel directly related to the activity.
2. Materials and supplies required to complete the activity.
3. Minor equipment purchase cost, <$5,000 per item.  [capitalized equipment purchases are not allowed, see below]
4. Equipment repairs and maintenance contracts, if the equipment is exclusively used for the recharge activity.
5. Equipment depreciation – allowed only when activity is recorded under a service center or auxiliary fund and for only the amount posted to the fund.
6. Facility costs (space, utilities, building operations & maintenance) - allowed only when activity is recorded under a service center or auxiliary fund and cost is posted to the fund.
7. Departmental administration costs – allowed only when activity is recorded under a designated operation, service center, or auxiliary fund and cost is posted to the fund.

See exhibit FIS-Ex003-09 “Recharge Allowable Cost Matrix” for additional detail.

Unallowable costs
These costs must NOT be included in any internal fee calculation, even if recorded on a designated operation, service center, or auxiliary fund.

• Advertising costs except for recruitment of personnel, procurement of supplies and services, and disposal of scrap or surplus material.
• Alcoholic beverages
• Alumni and fund raising activities
• Public relations/marketing costs, such as merchandise distribution (pens, hats, t-shirts)
• Bad debt expense; fines/penalties
• Equipment purchases >$5,000 (These costs are capitalized and depreciated)
• Commencement and convocation costs
• Provision for contingencies
• Value of donated services
• Lobbying costs
• Goods or services for personal use
• Interest expense
• Costs of meetings and conferences (except when the primary purpose is the dissemination of technical information)
• Membership in any civic or community organization; social, athletic or  country club
• Losses on the disposition of equipment
• Scholarships and student aid costs

Measurable units of goods or services
Fee must be calculated using the same unit of service upon which the charge will be based.   Documentation of unit per customer is required for charges and must be retained for audits by the responsible unit.   Examples of acceptable units of measure are: hour of machine time, hour of labor, days, procedure or test, mileage.  

Customer base –expected units of activity
All users (customers) must be included in the fee calculation, including those provided services free of charge or at discounted rates.  A class of users (students) may receive service at a reduced fee if the reduction is subsidized from another source.  A fee can not be waived for an individual customer.  Any reduced fee or non-charge (free) service must be imputed for the full cost during the annual fee calculation.  Any subsidization of a service must be approved by the college dean or VP and shown in the fund/index of the activity.    

Two Excel formats are presented to assist in fee calculations:

FIS-Ex003-10 “Recharge Fee Calculation-Short Form” is provided for those projects/fees which contain only variable costs, such as supplies and labor.

FIS-Ex003-11 “Recharge Fee Calculation-Long Form” is provided for those fees which contain both variable and fixed costs.  Fixed costs could include equipment maintenance contracts, equipment depreciation, service center administration.

    b.  EXTERNAL FEE

Fees to external customers may not be less than for those of internal customers, although they may be greater.  They should be set to recover at least the cost of providing the goods or services being sold.  Fees to external customers may include all allowable costs shown above plus: advertising costs, public relations/marketing costs, meetings and conference expense, interest expense, depreciation on equipment purchases or replacements >$5,000, and an amount to recover Unrelated Business Income Tax (UBIT).   Auxiliary enterprises may also recover bad debt and building-related costs.   The fee should also take into account the prices of such items or services in the marketplace.

Contact the PaCS office if the external customer requires an agreement with university signatures.  PaCS has a standard Fee Book Service Agreement template available.

7.  RESPONSIBILITIES
This section outlines the responsibilities of the unit, College/VP, university, Internal/External Fee Committee (I/EFC), and Finance & Administration/Business Affairs.

Department/Unit

• Business Center will coordinate with the unit to submit information for fee book preparation according to instructions received from Finance & Administration (F&A).
• Business Center will coordinate with the unit for proposed new fee-based activity and supplemental fee calculation information.
• Business Center will complete FOAPAL Form to request new Fund and Index, if needed.
• Business Center will work with units on annual review of fee rates and adjust them, if necessary, to eliminate surpluses or deficits.  Submit rates for fee book preparation according to instructions received from Finance & Administration (F&A). Fees must be approved and in OSU's fee book(s) before they can be charged.
• Business Center will review current fees for elimination, either because the service is no longer being performed or the cost is being handled in another manner (such as budget change). Notify Business Affairs through the on-line fee process to delete fee.
• Participate in the biennial study of recharge activities performed by Business Affairs, the business center, and college/unit business manager.  This review includes most recent fee calculation, unit of measure, documentation of users (customers), internal charge journal vouchers, and external customer revenue recognition.
• Business Center will ensure that all expenses and revenues connected with a fee activity are properly recorded into the Index/Fund of that activity.
• Responsible unit will retain records to document for eight (8) years for all internal sales and three (3) years for all external sales.

• Work papers showing how the fee was calculated; including job descriptions of employees whose salary is in the fee.
• Record of all customers/users of the service, even if not charged.
• Billing records that identify the service provided; amount charged and received.

College or VP

• Review department or unit request for all proposed new fee-based activities as it relates to the mission of the university and the customers to be served.
• Identify how any deficits and unallowable costs, if any, will be covered.
• Approve annual fee requests before they are submitted to F&A.
• Approve internal department reallocation rates which are not submitted to the university fee book, such as photocopier charges.
• Coordinate all recharge activity studies with the department/unit and Business Affairs.

Internal/External Fee Committee (I/EFC)

• Review all requests for proposed new fee-based activity.

• Is the activity part of the mission of the university?
• Can fees be charged for this activity consistent with university policy and government regulations?
• Are the fees calculated with only allowable costs, all estimated users, and verifiable measurable units?

• Review request for revised fees.
• Work with the Office of the General Counsel to ensure the External Fee book is presented for public review and hearing as required by State of Oregon.
• Assist in identifying enhancements for the on-line fee system.

F&A – Business Affairs

• Conduct biennial studies of all recharge fee activities; concentrating on internal fees charged directly or indirectly to projects, grants, and contracts.  This review includes:

• Most recent fee calculation
• Annual expenditures
• Unit or measure
• Documentation of all users (customers)
• Internal charge journal vouchers
• External customer revenue recognition

• Coordinate study activities with and through the business center.
• Work with the business center to correct any inconsistencies.
• Recommend appropriate financial accounting structure when necessary.

Additional References:

OARS 580-040-0010

IMD 6.500

DHHS-Division of Cost Allocation, FAQ’s

Purpose

To provide accounting guidance for Education & General (E&G) and Statewide Public Service (SWPS) funds.

Policy

The 0xxxxx series of funds (Fund Type 11) are Education and General Funds (E&G) and Statewide Public Service (SWPS) funds that are subject to expenditure limitations and are funded by a combination of State General funds and other funds (limited) revenue. 

Funds 03xxxx are known as Statewide Public Service funds.  Agriculture Experiment Stations, Extension Service, and Forest Research Lab are separately appropriated by the State.  The funding sources are State General funds and other funds (limited) revenue including Federal USDA appropriations. These funds are restricted as to their use and are not to be expended for instruction costs of university registered students.

Each fund has many indexes which join the fund, organization code (department) and program code (function) together.

Procedure

E&G and SWPS funds are allocated to colleges and departments through the budget process.  Annual expenditures of these funds should not exceed the budget. External and internal revenue is estimated during the budget process and is posted as available for expenditure. 

Expenditures

All costs for carrying out the activity or function should be placed on that index.  It is important to be aware of the Program Code (function) on each index.   Some are specific for ‘administration’ and some for ‘instruction’.  In the case of Agriculture Experiment Station SWPS funds, many indexes have Program Codes restricted to research.   

Sometimes an Activity Code is necessary to further define the expense or revenue to a particular activity. This is optional.

For E&G funds, institutional administrative overhead is funded through the budget process. 

For SWPS, an institutional overhead is applied to all expenditures and posted as account code 28204 Administrative & Support Service Charge.  See FIS 504 OSU Assessments. SWPS funds are also subject to State of Oregon Department of Administrative Services (DAS) Assessments FIS 503. These are posted as 280xx account codes. 

Recharging costs incurred in E &G or SWPS funds

When a department/unit wants to recharge E&G or SWPS costs internally within the university and to others external to OUS; the activity (service) being recharged must meet the criteria of a Departmental Cost Center as defined in the “Recharge Activities” policy FIS 1403-01.  If the criteria is not met, then either Designated Operations, Service Center, or Auxiliary Enterprise funds must be established in order to recharge for the service.

The fees should be developed to cover the direct costs associated with the activity. There are limitations. Those fees charged to internal customers (OSU and other OUS institutions) may not include unallowable costs; depreciation or capital equipment purchases; building space; building utilities, operations, or maintenance costs; land space; or departmental administrative cost.

Fees must be published in either the OSU Internal or External Fee Book, as appropriate, before they may be charged.  

See “Recharge Activities” for greater detail in calculating fees and documentation of customer usage. This is critical!       

Revenue

All cash from recharge activities deposited in E&G or SWPS funds is to carry an income Account Code (06xxx).  Cash received as a gift is not to be deposited in these funds; see FIS 102-05: Gift Income. 

Use internal sales reimbursements Account Code (79xxx) for non-cash recharge activities.  These are completed by Journal Voucher. See FIS 1107: Journal Vouchers.

Record retention

For external (cash) transactions, all documentation including fee, calculation, billing, and receipts should be maintained for three (3) years.

For internal  or Journal Voucher transactions, documentation of fee, calculation, and billing must be maintained for eight (8) years because these may involve charges to federal grants or contracts.

References

OAR 580-040-0010

Purpose

To provide accounting guidance for a Designated Operation including fee structure, customer base, expenses, carryover, and subsidies.

Policy

The 05xxxx series of funds (Fund Type 12) are used to account for self-sustaining activities related to community education, testing, and other public services. 

These are identified as Designated Operations:

1. Non-credit Instruction (field trips and international education) - the university collects funds from students for their individual travel, housing, and other related expenses which are not part of the direct cost of instruction.
2. Community Education (non-credit workshops, conferences, and seminars) - there is generally a registration fee for these.
3. Testing services (a testing activity that performs work primarily for customers external to the university) - fees charged for these activities must be formally approved by the State after a public hearing held each fiscal year.
4. Public Service (non-instructional services for the general public or outside groups) - fees are charged for the service.

Designated operating funds are accounted for in the Other Funds Non-Limited category of the OUS legislative budget.

Procedure

A Designated Operation fund is established when approximately 80% or greater of a self-support activity is funded from external sources (outside OSU).  A Service Center fund should be used when the majority of the recharge activity is internal to the university.

Expenditures

All costs for carrying out the self-support activity should be placed on the Designated Operation fund. This includes labor, OPE, supplies, minor equipment and travel, as applicable.   Purchase of capital equipment should be made in the departmental Education & General (E&G) funds.

Designated Operations are subject to a university administrative overhead applied to all expenditures.  There is no overhead charge on transfers (see “Fund balances” below).  The administrative overhead charge is posted as account code 70003 and is automatically calculated by Banner.  Do not use account code 70003 on individual JVs.

Designated Operations are subject to State of Oregon Department of Administrative Services (DAS) assessments.  These are covered by the university E&G budget funds and are not posted to the individual designated operation funds.

Departmental Administrative effort may be incurred for promoting, supporting, or accounting for these activities.  Up to 15 % of revenue for the current fiscal year may be recovered by the Business Center for these administrative costs.  Justification for the percentage charged must be included in the text of the charging journal voucher and backup must be available in the unit for review by Business Affairs and/or auditors.

The journal voucher entry is:

Dr. Designated Ops 05xxxx fund Index       use Account Code 28201
                                                             (Admin. Service Charge)

Cr. Department E&G 001100 fund Index    use Account Code 79390
                                                              (Admin. Service Internal Sales)

Types of costs that can be considered in the calculation of the administrative effort above:

Business Center or Unit clerical activities- brochure and workshop material preparation, workshop registrations, travel/lodging arrangements for speakers or attendees, and handling workshop logistics (locations, refreshments, equipment).

Business Center or Unit accounting activities - billing of service and testing activities, depositing of receipts, preparation of personal services contracts, payment of vendor invoices, balancing and reconciliation of funds.

Developing fees

Fees should be developed to cover all costs associated with the self-support activity and posted on the fund. There may be multiple services and fees associated with one fund.  Fees to Internal customers (OSU and other OUS institutions) may not include unallowable costs, capital equipment purchases or depreciation, building space, or building operations/maintenance costs. 

Before they may be charged, the fees must be published in the OSU External Fee Book and/or Internal Fee Book.   See “Recharge Activities” FIS 1403-01 for greater detail in calculating fees and documentation of customer usage.  

Customer base

The percentage of external vs. internal revenue (customers) should be reviewed annually to see if a Designated Operation fund is still appropriate.   Internal sales (09xxx account codes) should be no greater than 20% of total revenue.  Contact Business Affairs, if a change occurs.

Revenue

All cash received from recharge activities of a Designated Operation is to be deposited with an 06xxx income account code.  Cash received as a gift cannot be deposited in these funds; see FIS 102-05: Gift Income. 

Internal (non-cash) transactions must use 09xxx internal sales Account Codes as the credit on the journal voucher processing the recharge activity.  See FIS 1107 JV Processing.

Carry forwards

Funds may be carried forward from one fiscal year to the next fiscal year for continuation of the designated operation program.  Fund balances exceeding $25,000 or 20% of the annual revenue will be reviewed with the unit as to the planned future uses for the funds.

Fund balances

Fund balances above those needed for the future functions of the Designated Operation are transferred to the Education and General (E&G) Fund -Index ZARR70.  The responsible Business Center of the Designated Operating fund completes the journal voucher.  The Business Center then e-mails a request to the Office of Budget and Fiscal Planning for expenditure budget to the appropriate E&G operating index for expenditure. 

The journal voucher entry is:

Dr. Designated Ops 05xxxx fund Index         use Account Code 92005
                                                         (Transfer out - between FTYP Lvl 2)

Cr. Index ZARR70                                       use Account Code 91005
                                                          (Transfer in - between FTYP Lvl 2  )

Covering fiscal year-end deficits

Any overdrafts (deficit fund balance), as determined after posting receivables and outstanding payables, must be eliminated before year-end closing by transferring of adequate funding by the responsible department from E&G funds or gift funds.

The journal voucher entry is:

Dr. Unit funded Index                                   use Account Code 24901
                                                        (Designated Operation Fund Support)

Cr. Designated Operation Index                    use Account Code 09398
                                                            (Designated Operation Reimbursement)

Closing a Designated Operation fund

When closing a Designated Operation fund, all the accrual account codes (Axxxx and Bxxxx) must be $0 and there can be no encumbrances.  The cash balance is then transferred to the E&G Fund - Index ZARR70.  The responsible Business Center of the Designated Operating fund completes the journal voucher.  The Business Center then e-mails a request to the Office of Budget and Fiscal Planning for expenditure budget to the appropriate E&G operating index.   

The journal voucher entry is:

Dr. Index associated with the Designated Ops 05xxxx fund          use Account Code 92005
                                                                                        (Transfer out - between FTYP Lvl 2)

Cr. Index ZARR70                                                                    use Account Code 91005
                                                                                        (Transfer in – between FTYP Lvl 2)

Record retention

For external (cash) transactions - documentation of fee, calculation, billing, and receipts should be maintained for three (3) years.

For internal (journal voucher) transactions - documentation of fee, calculation, and billing must be maintained for eight (8) years because these may involve charges to federal grants or contracts.

References

OUS Policy 05.712: Designated Operationsin the OUS Fiscal Policy Manual
FIS 1401-02 Sales of Goods and Services policy

Purpose

To provide accounting guidance for a Service Center, including fee structure, customer base, carryovers, subsidies, equipment reserves, and contributed capital.

Policy

The 09xxxx series of funds (Fund Type 13) are used to account for self-sustaining Service Center activities.  They are not supported by E&G budget funds.  The primary function of a Service Center is to provide services for units or others within the institution, including grants/contracts.  Services can be provided to external customers as long as they are less than 20% of total revenue.  External customers may include non-OSU entities that are physically located on campus, other State of Oregon agencies, and other tax-supported Oregon entities, such as counties or cities. 

Service Center operation funds are accounted for in the Other Funds Non-limited category in the OUS State Legislative Budget.

A Service Center:

1. is self-supporting.
2. is responsible for its own equipment depreciation
3. maintains a reserve for equipment replacement
4. may be assessed for building usage, utilities, operations/maintenance

Expenditures

All costs related to the operation of the Service Centers should be recorded in the fund.  This includes salaries & OPE (including unit administrative costs), supplies, minor equipment, travel, equipment depreciation, and any building utilities/operations & maintenance charges.

Service Centers who purchase goods for resale must reconcile their inventories at least annually and make the necessary adjusting entries.

Capital equipment is recorded as an asset of the Service Center, not an operating expense.  Only the annual equipment depreciation is recorded as an expense and can be used in the fee calculation.

Service Centers are subject to State of Oregon Department of Administrative Services (DAS) Assessments FIS 503.  These are posted as 280xx account codes. 

Some Service Centers are charged for use of building space. These are explained in FIS 504 OSU Assessment.

Developing Fees or Rates

Rates must be based on allowable actual costs of the Service Center.  The cost can include annual equipment depreciation, but cannot include the cost of a new piece of capital equipment. Rates to internal customers (OSU and other OUS institutions) may not include unallowable costs, such as marketing or advertising.

All revenues received by Service Centers are for reimbursement of the actual cost of operations.  If a Business Center elects to recover administrative costs that support Service Centers, those costs must be paid by the Service Center on that fund. Adequate documentation of time & effort must exist to support the transaction.

The Service Center may add a service fee to non-university users.

A class of users (students) may receive service at a reduced fee, if the reduction is subsidized from another source. The subsidy must be posted in the Service Center as account code 09398 Support for Designated Operations/Service Departments.

See FIS 1403-01 Recharge Activities policy for specific information of allowable costs, unallowable costs, and determining the rates.

All users of a Service Center will pay at least the same determined fee for like services and the rates must be published in the OSU Internal Fee Book If any services are going to be offered on a per-service basis to external customers, the rates must also be listed in the External Fee Book.

Customer Base

All potential units of use and users of the service(s) must be considered when establishing the fees. Per OMB Circular A-21, the fee must be designed to recover only the aggregate costs of the services and can not discriminate against federally-supported activities or the institution, including usage for internal purposes. 

Revenue

Use internal sales Account Code (09xxx) for non-cash activities in a Service Center.  These are completed by Journal Voucher. See FIS 1107 Journal Vouchers.

All cash deposited in Service Center fund is to carry an income account code 06xxx.  Cash received as a gift is not to be deposited in these funds; see FIS 102-05: Gift Income.

Multiple Services in One Cost Center

A Service Center may provide more than one service and make a surplus on some services and a loss on others.  If a loss results in one activity and a surplus results in another activity, the surplus may be used to offset the loss so long as the mix of users is the same for the activity that gains as for the one that loses.

Excess Cash

Excess of income over expenses resulting in a positive balance cannot exceed 60 days of working capital.  Working capital is defined as:  current assets minus current liabilities.   For federal compliance purposes, the 60-day upper limit is calculated as the average operating expenses for the last year of operation multiplied by .1667 (60 days divided by 360 days).

Excess balances will be reduced in one (or both) of the following ways:

• A reduction of next year’s rates
• A refund to users

Deficit

If the fund balance at year-end is in a deficit position, funding is necessary and a journal voucher should be processed that debits the departmental index using account code 24902 Service Department Support Charge and credits the Service Center using account code 09398 Support for Designated Operations/Service Departments.

Keep in mind that a deficit in working capital means that expenses exceeded revenue and it may be necessary to request an increase in rates.

The amount recorded on the official books of record as of fiscal year-end (close of period 14; June 30) of each year will be the amount used for the determination of the working capital limits. Therefore, it is important that all accounts receivable and accounts payable, as determined in accordance with Generally Accepted Accounting Principles (GAAP), be posted in Banner before the close of the fiscal year.

Contributed Capital – transfer of funds from responsible department

Any transfer of funds made to a Service Center will be accounted for as contributed capital.  If fees cannot be set at a rate sufficient to recover operating costs, the unit may not directly pay Service Center costs from other sources. 

Examples of contributed capital include a subsidy to cover an operating deficit; transfer of beginning funds at inception of the Service Center; transfer or conversion of a storeroom inventory to a Service Center; or the purchase or transfer of equipment to a Service Center. Documentation related to the transaction that identifies the source, amount, date, reason, and authorization for the contribution must be retained for audit.

Contact the Associate Director of Business Affairs – Financial Accounting & Analysis unit for assistance with contributed capital matters.

Returning Funds - to responsible department from a service center

Any surplus amounts returned to units by Service Centers must be a return of previously contributed capital or a part of excess earnings being refunded as current year billing adjustments to all customers.

Inventory - may be a necessary component of service centers

If a Service Center normally deals in inventoried (stockroom) items such as parts or chemicals, an inventory (Balance Sheet) account code must be used to properly identify the value of inventory at fiscal year-end.   Physical inventories must be taken and the value adjusted annually. 

Funding Equipment Replacement Reserve (Depreciation)

Each Service Center is responsible to develop a business plan that includes setting aside funds for equipment replacement.  Each Service Center will have a capital asset replacement plan. The plan must set a target for funding levels and include dollar amounts for contributions to the reserve fund.  This plan must be submitted to the Director of Business Affairs and approved by the Vice President for Finance and Administration at the beginning of each fiscal year.

Both operating and reserve funds for Service Centers are non-interest bearing funds.  Oregon Revised Statutes make no provision for these funds to be interest bearing.

Cash will be moved from the Equipment Reserve back to the operating fund when a funded asset is removed from inventory and replaced with a similarly functioning item causing the Reserve to be over funded.  Do not use the Reserve fund to process purchases.  Purchases can only be made using the operating fund/index. 

Cash is moved between the operating fund and reserve by use of Exxxx and Fxxxx account codes. 

Reference: IMD 6.350.

Record Retention

A Service Center must adequately document its activities and maintain records to support expenditures, billings, and revenues.  At a minimum, the following records must be retained by the Service Centers for no less than eight years because of possible charges to grants or contracts:

1. Work papers showing how the charge out rates (fees) were calculated.
2. Records that identify all users, the services provided to each user, and amount billed.

Termination of Service Center Status

When a Service Center expands its customer base so the income from non-university users (external) exceeds 20% of the Service Center's annual income for two consecutive years, the status of the service department will change to a Designated Operating Fund. A new fund will be established for the activity. Equipment reserve funds will be moved back into the Service Center operating fund; then the cash balance of the operating fund will be transferred to the institution's Current Education & General Fund Balance. The transaction will be account code 92005 debit to the Service Center index and Account code 91005 credit to ZARR70 E&G Fund index. The Business Center then notifies the Office of Budget and Fiscal Planning of this transaction and desired index for E&G fund budget increase.

Reporting to OUS Controller’s Division

Working Capital
The Service Center Working Capital, as reflected in the official accounting records (FIS Banner), will be monitored and analyzed on an annual basis at fiscal year-end.

OSU Business Affairs will prepare and retain a report listing of all Service Center funds reconciled to the general ledger, computation of compliance to working capital limits, notation of plans for eliminating excesses or deficiencies, and notation of any exceptions to policy.  Information for this report will be requested from each active Service Center.   Only the OSU Vice President for Finance and Administration can authorize exceptions to the 60-day working capital maximum.   

Equipment Reserves
The Service Center manager will annually prepare and submit a Management Plan to the Director of Business Affairs for approval by OSU’s Vice President for Finance and Administration or designee. The plan shows a five-year forecast for the Service Center’s equipment repair or replacement needs and includes an analysis of the annual earnings necessary to accumulate the funds required to execute the plan.  The plan does not go forth to the OUS Controller’s Division; however, it must be retained at OSU Business Affairs for audit purposes.

References

OUS Fiscal Policy 05.713
OARS 580-040-0010
DHHS-Division of Cost Allocation, FAQ’s
DHHS Facilities & Administrative Rate Audit Guide (Specialized Service Facilities)

Purpose

To provide guidance for accounting of Auxiliary Enterprise operations including fee structure, customer base, expenses, carryover, and subsidies.

Policy

The 1xxxxx series of funds (Fund Type 2x) are used to account for self-supporting activities of auxiliary enterprises. An auxiliary enterprise exists to furnish goods or services to students, faculty, or staff as individuals and charges a fee directly related to the cost of the goods or services. Auxiliaries may also furnish services incidentally to the general public.

An auxiliary enterprise:

1. is self-supporting.
2. is responsible for its own equipment depreciation.
3. maintains a reserve for equipment replacement.
4. is responsible for its own buildings, including utilities and maintenance.
5. maintains a reserve for major building renovations.

Auxiliary funds are accounted for in the Other Funds Non-Limited category of the OUS legislative budget.

OSU auxiliaries include:

Housing and Dining
Student Centers, including the Memorial Union & Dixon Recreation Center
Intercollegiate Athletics
Student Health Services
Parking
Hatfield Marine Science Center Bookstore
LaSells Stewart Center
Conference Services
Agriculture Experiment Station housing rentals

Procedure

Expenditures
All costs related to the operation of the auxiliary enterprise activity should be recorded in the fund.  This includes salaries & OPE (including unit administrative costs), supplies, minor equipment, travel, equipment depreciation, building utilities/operations & maintenance, and building depreciation.  

Auxiliaries who purchase goods for resale must reconcile their inventories at least annually and make the necessary adjusting entries.

Capital equipment is recorded as an asset of the auxiliary, not an operating expense. Only the annual depreciation is recorded as an expense. 

Auxiliary enterprises are subject to an institutional administrative overhead on all expenditures, exclusive of transfers and depreciation.  See OSU Assessments – FIS 504 and OUS Auxiliary Enterprise Indirect Cost Allocation Policy 15.105.  The administrative overhead charge is posted as account code 28204 General Admin Overhead Charge.   

Auxiliary enterprises are also subject to State of Oregon Department of Administrative Services (DAS) assessments FIS 503.  These costs are posted as 280xx account codes. 

Developing Fees
Fees should be developed to cover all costs of the auxiliary enterprise. There may be multiple services and fees associated with one fund. Fees to Internal customers (OSU and other OUS institutions) may not include unallowable costs such as marketing or advertising.

Auxiliaries are the only units that may charge internally for ‘rental of buildings or land’.  The exception: Intercollegiate Athletics can not charge academic or administrative units for use of their facilities because OSU E&G funds pay for a portion of the costs.  See IMD 8.016(3) Proportionate Financing of Joint Use Facilities. 

The fees must be published in either the OSU External Fee Book or Internal Fee Book, as appropriate, before they may be charged.  See “Recharge Activities” for greater detail in calculating fees. FIS 1403-01. 

Revenue
All cash deposited in Auxiliary funds is to carry an income Account Code (06XXX).  Cash received as a gift is not to be deposited in these funds. See FIS 102-05: Gift Income.

Use internal sales Account Code (09XXX) for non-cash activities.  When both sides of the transaction are Auxiliary funds use 79XXX as the credit account code. These are completed by Journal Voucher. See FIS 1107 Journal Vouchers.

Deficits
Any auxiliary enterprise with a current deficit must present an action plan at fiscal year-end to the Vice President for Finance and Administration for elimination of the deficit. 

Equipment Reserves
Auxiliary Enterprises, as self-sustaining organizations, must also set aside funds for equipment replacement. The auxiliaries must develop a business plan which includes a Capital Asset Replacement Plan. This plan is submitted to the Director of Business Affairs and approved by the Vice President for Finance and Administration at the beginning of each fiscal year. The plan sets a target for funding levels and includes dollar amounts for contributions to the reserve fund.

The amount in the equipment reserve can not be greater than the equipment accumulated depreciation of the auxiliary.  Equipment Reserve funds for Auxiliary Enterprises are interest-bearing funds. The interest earnings should be considered when creating the schedule for funding the reserves.

All purchases are made from the operating fund.  When purchasing an equipment replacement, cash is moved from reserves to the operating fund by use of Exxxx or Fxxxx account codes.  An auxiliary can not expend out of reserve funds themselves.

Building Reserves
Building Repair reserve funds are required so self-supporting organizations set aside sufficient funds to adequately maintain their “owned” buildings.  The Building Repair Reserve funding level requirement calls for an assessment by Auxiliary personnel of the “owned” buildings condition and age.  Each Auxiliary must review its particular building repair needs and prepare a business plan for building repair projects in the same manner as for capital equipment replacement.  The plan sets target funding levels for upcoming years.  This plan must be submitted to the Director of Business Affairs and approved by the Vice President for Finance and Administration at the beginning of each fiscal year.

The amount in Building Reserves is not related to accumulated depreciation.

Reserve funds for building repairs for Auxiliary Enterprises are interest-bearing funds.  The interest earnings should be considered when creating the schedule for funding the reserves.

When the Building Repair Reserve Fund is funded with cash according to the schedule in the business plan, the transaction will be a fund deduction (account code F0002) to the Operating Fund and a fund addition (account code E0002) to the Building Reserve Fund.

Building Repair Reserve Funds cannot be used to fund new construction or capitalized projects; only major maintenance and repairs such as roof or plumbing replacements.  To use building repair reserves, the cash must be moved to a plant repair fund 8XXXXX.  Units can not expend out of reserve funds themselves.

Record Retention
For external (cash) transactions, documentation of fee, calculation, billing, and receipts should be maintained for three (3) years.

For internal (journal voucher) transactions, documentation of fee, calculation, and billing must be maintained for eight (8) years because these may involve charges to federal grants or contracts.

Additional References
OUS Policy 15.001: Auxiliary Enterprise in the OUS Fiscal Policy Manual.

FIS 700 Reserves and Investment Management.

Purpose

To encourage self-support of University departments through the sale of goods and services for fees.

This policy establishes guidelines and a process under which the sales of goods and services for fees may be approved; it establishes a mechanism for the review of such sales. Instruction, research, and public service activities central to the mission and obligations of the university are excluded from this policy.

Excluded are activities which charge for instruction in regular, summer school, extension, evening, and continuing education; services provided in the practicum aspects of university instructional and research programs; services mandated by state statutes; sales of residual products of research programs; services for fees in its extracurricular or residential life programs, including residence halls, food services, alumni, athletic and recreational programs, conferences and workshops, and the performing arts programs.

Background Information

Oregon's Land, Sea, Space, and Sun Grant University, Oregon State University's mission and obligations include teaching, research, and service to many constituencies. Funding for OSU's diverse activities is derived from federal, state, other governmental/public agencies, and private sources. Competition for public funding at all levels of government and the continuing goal of making the most effective use of limited resources have created an environment in which some university components are encouraged to become self-supporting. Self-support is accomplished through direct compensation for goods and services.

Conflict may result when university enterprises are deemed to be in competition with private entrepreneurs. These conflicts must be reduced or eliminated through a process which is sensitive to the need for entrepreneurial activity by both parties, because both parties are fulfilling crucial societal and economic roles.

Tax implications, for both income and property taxes, are frequently found in these areas of conflict. Legislative goals of discouraging "unfair competition" and increasing tax revenues have resulted in close scrutiny to determine what is and is not an "unrelated business activity," and subject to Unrelated Business Income Tax (UBIT).

Policy

Oregon State University may engage in the direct sale of goods and services to individuals, groups, or external agencies for fees only when those services or goods are directly and substantially related to the mission of the university, which includes teaching, research, and public service. Charges for such goods and services shall be determined taking into account their full cost, including university overhead when applicable, as well as the prices of such items in the marketplace.

When the question of whether or not any particular education-related business activity should be provided by Oregon State University, a determination shall be made as to whether the activity is currently and adequately provided by private businesses. If the services of private businesses are considered adequate but the activity is nevertheless deemed important to be provided by the university, the reasons and justification for the activity shall be stated in writing and submitted by the President or his designee to the Vice Chancellor for Finance and Administration for the Oregon University System (OUS) or their designee, in accordance with applicable policies of the State Board of Higher Education. (Required by OUS "Education-related Business Activity" IMD 6.500).

State Board policy allows system institutions to promote and market in off-campus public media only those services and events which are of interest to the general public, such as cultural presentations, intercollegiate athletic contests, and educational programs.

When entering into contractual arrangements with third parties to provide goods and services in fulfillment of obligations of the university, the intent and spirit of the policies expressed herein shall, to the extent practicable, be incorporated in the terms and conditions of such contracts. All contracts must have official university signature. Signature authority is limited to those on the approved list.

Criteria
There are three distinct categories of relevant transactions which occur at the university:

1. Internal university interdepartmental transactions for goods and services necessary for the mission of the university;
2. Sales of goods and services to faculty, staff, and students which are for the convenience of and in support of the broad mission of the university; and
3. Sales to persons or organizations external to the university.

Transactions in category one are characterized as within the "campus community;" transactions in category two are characterized as within the "university community;" and in category three as the "external community." The unique nature of each of these kinds of transactions makes it appropriate to use different criteria in evaluating requests for each type of sales program.

Campus Community, Non-cash Transactions
Internal non-cash transactions of official university business between units, departments, and offices, necessary to meet the teaching, research, and service mission of the university, shall be governed by the university regulations on budget, accounting, and auditing which apply to such transactions.

Criteria for Sales to the University Community
Each of the following criteria shall be used in assessing the validity of providing goods and services for charge to students, faculty, and staff.

1. The good or service is substantially and directly related to the university's instructional, research, or public service mission;
2. Provision of the good or service on campus represents a special convenience to and supports the campus community or facilitates the extracurricular, public service, or residential life of the campus community;
3. The price or fee for the good or service is established at such a level as to account for the full cost, including university overhead as applicable;
4. Procedures are in place for ensuring that goods or services are provided only to members of the university community.

Criteria for Sales to the External Community
The University shall not engage in any sales activities solely for the purpose of raising revenue to support an educational, service, or research activity if the goods or services sold are not directly and substantially related to the educational, research or service program or activity. Each of the following criteria shall be used in assessing the validity of providing goods or services to the external community:

1. The good or service represents a resource which is directly related to a unit's educational, research, or service mission, which is not commonly available or otherwise easily accessible, and for which there is a demand from the external community.
2. The price or fee of the good or service is established to account for the full costs of the goods or services, including university overhead as applicable. The price of such items in the private marketplace shall be taken into account in establishing the price or fee. Fees to external community can not be less than those charged to campus (internal) customers.

Review and Approval Procedures
Except in instances requiring the approval of the Vice Chancellor of OUS or his/her designee, approval for the direct sale of any goods or services covered by this policy shall be vested in the OSU Vice President of Finance and Administration.

Before any sales of goods or services may be implemented, the unit proposing the sale shall provide to the Internal/External Fee Committee (I/EFC) [appointed by the Vice President of Finance and Administration] a request setting forth all pertinent information about the sales plan as set forth in OSU Recharge Activities policy FIS 1403-01. Each category of goods or services sold is considered individually. All new categories of sales shall be justified. The I/EFC will notify the department/unit and respective Dean or VP the results of the review. If the proposal is approved, the sales fee will be posted in the appropriate fee schedule. State Board policy requires the adoption of a fee schedule as part of this process. This adoption is required before any fee can be charged to the external community.

Oversight
The Vice President of Finance and Administration is designated as the officer who shall :

1. Resolve matters concerning the internal application of this policy. It is the role of the Office of Budget and Fiscal Planning to review requests from Deans/Executive Administrators to establish revenue budgets. Should the Budget Office believe that the request is inconsistent with this policy, it shall refer the matter to the VP for Finance and Administration for final decision.
2. Address questions from members of the external community about specific sales programs
3. Review proposed sales of goods or services to other governmental agencies when they involve university-wide considerations.

Additional Information

Recharge Activities policy FIS 1403-01
External Revenue policy FIS 100
Internal Revenue policy FIS 200
OARS 580-040-0010

Purpose

To ensure funds are available to partially fund grant and contract audit disallowances.  A portion of the Facilities and Administration (indirect cost) recoveries is set aside for this purpose.

Policy

Oregon State University is required to provide funding organizations the necessary proof that the provided funds were expended for ordinary and necessary project expenses.  Normally, this proof is made available for review by funding organizations for three years after the project is terminated.

Oregon State University is required to refund to funding organizations those project costs that have been found to be unallowable charges against such projects.  These costs for the purpose of this policy are defined as “costs disallowed by audit” and do not include costs disallowed for other reasons such as costs being outside of the project’s time period.  The term “audit” only applies to the examination of source documents by the funding organization or their representative.

Oregon State University is restricted in its sources of funds and ability to fund project costs disallowed by audit.  This policy provides for a structured method of accumulating funds to provide assistance to departments suffering audit disallowances.  All units participating in contract and grant activity will fund this assistance.

A disallowance fund has been established and will be maintained at a level specified by the Vice President for Finance and Administration.  Funding will be provided by diverting a portion of the Facilities and Administration fees (indirect cost recoveries).  Each fiscal year, a percentage of the total indirect costs recovered is transferred into an undistributed indirect cost fund before return of overhead is distributed to maintain the required funding level. 

Because the fund is derived from facilities and administration charges (indirect cost recoveries), it is understood that audit disallowances on projects not receiving full indirect cost recovery will not be covered to the same extent as audit disallowances on projects recovering full indirect costs.

It is the intent of Oregon State University to apply a maximum relief from the fund of 50% of audit disallowances on any one instrument that is or has received full indirect cost recovery.  The unit/department to which the instrument was assigned will fund the remaining 50%.  It is understood that the percent of participation will decrease as the indirect cost recovery rate varies from full recovery.

Procedure

The costs in this fund are all considered university Cost Sharing because the cost was incurred for the purpose of completing the sponsored activity.  As the expense is placed on the fund, the fund is replenished up to the maximum from the Facilities and Administration (indirect cost recovery) clearing fund.

The 50% that is charged to the unit/department is also coded Cost Sharing.  The cost overrun index of the department is used, which then automatically transfers revenue/budget from a general fund source to cover the expenses.

Information on this subject is contained in the OUS Financial Irregularity Policy, per Oregon State Board of Higher Education Internal Management Directive.

Purpose

To provide guidelines for all OSU Administrators which have or will be implementing electronic signature for conducting OSU business.

Background Information

The Electronic Signatures Act (Public Law No: 106-229) went into effect on October 1, 2000 and gives electronic contracts the same weight as those executed on paper. The act has some specific exemptions or preemptions.  Although the act enables documents to be signed electronically, the option to do so lies solely with the consumer.

The act specifically avoids stipulating any 'approved' form of electronic signature, instead leaving the method open to interpretation by the marketplace.  Any numbers of methods are acceptable under the act.  Methods include simply pressing an I Accept button, digital certificates, smart cards, and biometrics.

E-signatures may be implemented using various methodologies depending on the risks associated with the transaction.  Examples of transaction risks include: fraud, non-repudiation, and financial loss.  The quality and security of the e-signature method should be commensurate with the risk and needed assurance of the authenticity of the signer.  Authentication is a way to ensure that the user who attempts to perform the function of an electronic signature is in fact who they say they are and is authorized to “sign”.

Definitions

Authentication

To establish as genuine and to verify the identity of the person providing an electronic signature.

Credential

An object that is verified when presented to the verifier in an authentic transaction

Electronic Record

A contract or other record created, generated, sent, communicated, received, or stored by electronic means.

Electronic Signature or e-Signature

An electronic identifier that is created by a computer and is intended by the party using it to have the same intent, affect and authority as the use of a manual (either written or facsimile) signature.

Transaction

A discrete event between a user and a system that supports a business or programmatic purpose.

Policy

The intent of this policy is to allow for e-signature use at OSU by means of methods that are practical, secure, and balance risk and cost. It is not the intent of this policy to eliminate all risk but rather to provide a process that gives parties assurance that appropriate analysis was completed prior to implementation of e-signature, and that the level of user authentication used is reasonable for the type of transaction conducted.  The E-Authentication Guidance for Federal Agencies, OMB 04-04 defines four levels of assurance, Levels 1 to 4, in terms of the consequences of authentication errors and misuse of credentials. The guidance defines the required level of authentication assurance in terms of the likely consequences of an authentication error.  The e-Authentication Risk and Requirements Assessment (eRA) Tool is the risk and assurance level evaluation tool to be used at OSU.  See FIS Exhibit 003-15 e-Signature Authentication Assurance Levels.

User authentication entails verifying the user’s unique credentials: such as username and password, or a digital certificate.  This may requires validation against specific OSU held information.  Security and access to OSU-specific information is determined by a “record custodian.” Record custodians are responsible for compliance with all legal obligations related to information, and in that capacity have final authority for the utilization, access, and release of data under their jurisdiction. In some instances there are multiple custodians for various sets of data.

Under this policy, a University entity may implement use of e-signatures.  A University entity, or “Unit”, is the OSU organization conducting business by means of an e-signature; such as a College, department, auxiliary, or administrative division.  Any University transaction enabled by e-signatures must be evaluated by the Unit in conjunction with the applicable records custodian, using the eRA tool.  (This includes any existing implied or explicit e-signatures in use prior to the adoption of this policy.)  For risk assessment and review purposes, similar types of transactions may be grouped together under one agreement.  Implemented e-signatures will be reviewed periodically for appropriateness, and continued applicability.

An e-signature may be accepted in all situations if requirement of a signature/approval is stated or implied. This policy does not supersede situations where laws specifically require a written signature.  This policy cannot limit the right or option to conduct the transaction on paper or in non-electronic form and the right to have documents provided or made available on paper at no charge.  The e-signature must be protected by reasonable security measures as applicable to established computer functions of the University

Evaluation Process

An Evaluation of Risk will be performed by the Unit to determine risks associated with using an e-signature and to determine the quality and security of the e-signature method required.  An evaluation will be made using the E-Authentication Guidance for Federal Agencies, OMB 04-04 for reference and guidance.  The e-RA (Risk Assessment) Tool will assist Units determine the level of risk.  The reports resulting from the eRA assessment shall be included as part of the official record for this e-signature implementation and submitted with the proposal to the records custodian.

Determination of Electronic Signature Methodology should be commensurate to the assurances needed for the risks identified.  In addition, specifications for recording, documenting, and/or auditing the e-signature as required for non-repudiation and other legal requirements shall also be determined by the Unit.  The lowest cost, least complex method acceptable for the risk is generally preferable.  The National Institute of Standards and Technology (NIST) Electronic Authentication Guidelines: 800-63 can be useful in making this determination.

Units that propose e-signature methods that are at a higher or lower level of assurance than indicated in the risk assessment process shall:

• Describe the reason for variance.
• Identify the potential risk of using a tool from a lower (or higher) assurance level than the risk assessment identifies.
• Identify the steps that will be taken to mitigate the risk or justify why a higher assurance level method is appropriate.
• Obtain the signed approval of the Unit director. The signed document shall be included as part of the official record for this e-signature implementation.

Approval

The Unit will seek approval to implement an e-signature from the applicable records custodian, using the Proposal for Use of e-Signature form (see FIS Exhibit 003-16).  It is the records custodian’s responsibility to ensure that the proposed e-signature and method meet the requirements of this policy.  In determining whether to approve an e-signature method, consideration will be given to the systems and procedures associated with using that electronic signature, and whether the use of the electronic signature is at least as reliable as the existing method being used. 

Should it be deemed necessary by the records custodian, he/she will seek approval from University Legal Counsel and the appropriate information technology office or officer, such as the Chief Information Security Officer (CISO).

Implementation

The implementation process will likely differ for each transaction and for each Unit, as it is dependent on many factors such as technical environment, appropriate assurance level, and the nature of the transaction.

Maintenance and Review Requirements

Recordkeeping - A formal record of the risk assessment evaluation, e-signature method selection, and justification will be maintained by the Unit.  At such time as the University has implemented a technology security plan and infrastructure, a copy would also be filed at the office of the CISO.

Security - Software and/or hardware that is required for e-signatures, such as Public Key Infrastructure (PKI) certificates, “fobs”, or “dongle”s, will be provided by the Unit.  The Unit will also ensure that appropriate controls and monitoring of the software/hardware are in place.

Periodic Review - A review of each e-signature implementation will be conducted periodically, but no less than every three years, by the Unit.  This will include an evaluation of the e-signature use to determine whether any applicable legal, business, or data requirements have changed.  A determination will be made as to the continued appropriateness of the risk assessment and e-signature implementation method.

A record of this review will be documented and filed as part of the official record for this e-signature implementation maintained by the Unit.  If as a result of the periodic review the risk level changes, a new risk assessment must be completed, including review and approval.

Authority

Various Federal rules and regulations establish the authority for use of electronic signatures. 

The Electronic Signatures in Global and National Commerce Act enacted on June 30, 2000 (S761, HR 1320 IH, commonly known as the ESIGN) established the validity of electronic records and signatures.

The Uniform Electronic Transactions Act (UETA) provides a legal framework for electronic transactions.  It gives electronic signatures and records the same validity and enforceability as manual signatures and paper-based transactions.  UETA was adopted by Oregon in 2001 and created legal recognition for most electronic transactions and parallels the legal recognition for paper transactions conducted in Oregon. (Uniform Electronic Transactions Act Chapter 84 (HB 2112) and OAR 125-600-0000.)

Additional Information

Family Educational Rights and Privacy Act (FERPA): 34 CFE Part 99; Final Rule. These final regulations provide general guidelines for accepting “signed and dated written consent” under FERPA in electronic format.

OSU Acceptable Use of University Information Policy

Standards for Electronic Signatures in Electronic Student Loan Transactions