1403-05: Auxiliary Enterprises
Fiscal Operations Manual
Section 1403: Financial Accounting and Analysis
To provide guidance for accounting of Auxiliary Enterprise operations including fee structure, customer base, expenses, carryover, and subsidies.
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:
- is self-supporting.
- is responsible for its own equipment depreciation.
- maintains a reserve for equipment replacement.
- is responsible for its own buildings, including utilities and maintenance.
- 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
Student Health Services
Hatfield Marine Science Center Bookstore
LaSells Stewart Center
Agriculture Experiment Station housing rentals
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.
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.
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.
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.
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 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.
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.