In July, 1980, the University negotiated a specialized service center policy with the United States Department of Health & Human Services. The terms of this policy were in accordance with OMB Circular A-21 and included descriptions of preferred procedures for the calculation of and accounting for depreciation provisions considered in the development of service center rates. In order to ensure compliance, the negotiated policy served as the basis for two separate policies and procedures manuals: one for recharge systems and the second for service centers and their rate-setting processes. These manuals have been distributed to personnel responsible for managing each respective service center.
Given the number of service centers of the
University, there is a need for a standard depreciation policy that is
consistently and uniformly applied. Accordingly, the following Service Center
Depreciation Policy is effective for service center rates to be used effective
July 1, 1992.
POLICY
The policies and procedures manuals for recharge systems and service center operations should be recognized as containing the official University authoritative policy regarding depreciation for service centers, subject to the following clarifications:
Depreciation should be calculated for all capital assets used exclusively in the operation of the service center or in rendering services provided by the center.
Repair and replacement funds used to accumulate depreciation funded through service center rates must be used only for the replacement of capital assets, and/or repair and maintenance thereto. It is the responsibility of the business manager or other administrator responsible for the financial operations of the service center to monitor the adequacy of the fund balance to fund future capital needs.
Data recorded in the central accounting system fixed asset module are the official University records. All depreciation calculations should be based upon this data.
Debt funded assets, including lease purchases, should be depreciated.
Detail procedures are to be worked out with the
Controller through the Director of Government Cost Compliance.
POLICY APPROVED BY JOINT ACADEMIC/ADMINISTRATIVE COUNCILS 9/11/92.