PHILOSOPHY
The University encourages the entrepreneurial activities of departments and/or faculty members but recognizes that many of these activities carry an overhead cost to the University. While it is not intended to penalize the entrepreneur, it is necessary to take steps to recover a part of the costs associated with these activities. In accordance with this philosophy, an assessment will be made against all cash transactions to cover a portion of the overhead associated with certain activities. This assessment is also referred to as a business tax.
ASSIGNMENT OF FUNDS
Each A-123 establishing a designated fund should
identify its source(s) of revenue and whether that revenue should be assessable
(see criteria below). Funds are categorized based on the type of activity
performed. The Business Tax Committee reviews and approves these
classifications. General Accounting maintains a master list of funds with their
revenue source and their appropriate assessment category.
ASSESSABLE FUNDS: Funds receiving outside revenue are levied an assessment if they fall into one of the categories listed below. Outside revenue is cash received from external entities and deposited with the University.
| Departmental Service Centers: By policy negotiated with the federal government, we do not charge overhead to this group of internal departments and to external sources (including faculty, staff and students). The additional revenue generated for the assessment will effect the breakeven formula for each service center. This will have some (minimal) effects on the Indirect Cost Proposal to the federal government. |
| Patient Care Centers: These funds have been designated, over the years, to fund the operations of clinical activities. They are similar to the activities occurring in the outside practice plan corporations with the exception that all revenue and expenditures are run through the University's books. |
| Continuing Education/Noncredit Courses: These courses are not subsidized by the State of Ohio. Accordingly, all costs should be covered by the student. |
| Student By Product: These funds accumulate income generated as a by product of the students' education. |
| Special Recharge Unit: Units operating not as a departmental service center or any of the defined centers within the federal government cost tracking system but who charge rates to various internal and external users. External users will be assessed an additional fee to cover the assessment. |
| Clinical Trials: Testing drugs: chemicals and various samples fall under this general category. Many University departments contract with local businesses to provide this service at a fee. Where the contract is substantial, it should be handled through the Sponsored Program Accounting Office. Where it is for minimal amounts, it can be run through designated funds and should include an additional assessment. |
| Publications: Outside sales of published materials. |
| Rental:Rental of University facilities. |
| Stores: Operations: Sales of store items to outside entities. |
| Other: Areas of revenue generation which do not easily slot into one of the above categories but which should be assessed the additional levy. |
NONASSESSABLE FUNDS: If your revenue falls into one of these categories, your funds are nonassessable.
| Agency Funds: These
funds are being handled by the University as an agent for ran outside
organization. Dollars are minimal. Branch Campuses: Branch campuses support 100% of their costs including a full overhead charge from the central campus. |
| Contracts: These specific contracts should be examined for addition to the Grants and Contracts system. |
| Course Related Materials: Where a fund is established solely for the purposes of collecting revenue from students for course materials, no assessment should be levied. |
| Courses for Credit: Courses for credit should not be levied an assessment. |
| University Service Center: There are three such centers which have been established in accordance with negotiations with the federal government. |
 | CITS - Computing Center |
| Laboratory Animal Resources |
| CITS - TELCO |
ASSESSMENT RATE
At the end of each fiscal year, the Government Cost Compliance Office performs an internal overhead calculation. The results of this calculation is used to fix the assessment rate. Each August the calculation is completed. The assessment rate is announced to the University community for use in the following fiscal year. This advance notice period provides sufficient lead time for users to make adjustments in the rates they charge their users.
ASSESSMENT ENTRIES
At the end of each quarter, General Accounting calculates the amount of assessment due (quarterly revenue multiplied by the assessment rate %) by fund. The assessment entry is coded as a non-mandatory transfer from each designated fund to undesignated general funds.
If you have questions concerning the policy and
the assignment of funds, please contact the Business Tax Committee (see
Committee Section). If you have questions concerning the accounting entries,
please contact the General Accounting Office.
6.1-6
