NACCA - Leading Excellence in Research Costing Practices Service Center Management From a Central Office Perspective Authors: Hank Kirschenmann – Attain LLC Kim Hoebel – Purdue University Chea Smith – Rutgers University NACCA - Leading Excellence in Research Costing Practices General Conference: 10/3 – 10/5, 2017

Service Center Management From a Central Office Perspective Introductions – Panel Participants Importance of Structured Program Components of Program - Policies - Procedures - Roles and Responsibilities - Ownership of Program/Authority to Make Decisions Operational Challenges Real Life Challenges Wrap-up

Introductions – Panel Participants

Panel Participants

Importance of a Structured Program

Importance of a Structured Program Potential Audit Issues Uniform Guidance Section 200.468 (Specialized Service Facilities) The costs of such services, when material, must be charged directly to applicable awards based on actual usage of the services on the basis of a schedule of rates or established methodology that: Does not discriminate against federally supported activities of the institution, including usage by the institution for internal purposes Is designed to recover only the aggregate costs of the services Rates shall be adjusted at least biennially, and shall take into consideration over/under applied costs of the previous period(s) Where the costs incurred for a service are not material, they may be allocated as F&A costs. Possible pay-back to Federal Government Possible adverse publicity for institution

Importance of a Structured Program Potential Audit Issues (continued) History of Federal Audits – DHHS/OIG Early to Mid 90’s – 15+ Schools Current Environment Scope Review of University Policies Development and Application of Rates Multiple Years (5) of Detailed Data Number of Service Centers at Each School Selected for Detailed Review: 2 - 12

Importance of a Structured Program Complicated Issues Lack of Authority Given to Watchdog Maximizing Recovery of Costs New Item for Consideration: Direct Charging of Institutional Review Board Costs via Service Center

Components of Program

Components of Program Policy Procedures Roles and Responsibilities Ownership of Program at Central Office(s) Senior Level Position with Authority to Make Decisions

Components of Program– Typical Policy Definitions: SSF vs. Service Center vs. Recharge Center Policy Statement: Reference Uniform Guidance Rate Components: Direct and Indirect (where appropriate) Break-even over a Specified Time Period Service Center Pricing Billing, Documentation and Authorization Accounting

Components of Program– Typical Procedures Initial Budget Approval Monthly Financial Reports Quarterly / Annual Break-even Reports Annual Budget Review Capital / Depreciation Accounts Subsidized Users Multiple Services

Components of a Program – Typical Roles and Responsibilities Department Business Manager/Budget Office Responsible for financial position – annual budget submissions and cost analyses, rate schedules, break-even analysis. Ensures compliance with institutional costing policy. Initially approves service center budget School and College Level Oversight Provide funding for equipment purchases. Support scientific endeavors of the service center and question operations when services become obsolete. Hold service centers accountable for budgetary, financial, and regulatory compliance requirements.

Components of a Program – Ownership at Central Administration Accounting or Post-Award Office (Purdue: ______________, Rutgers: ______________, UNC Charlotte: ______________) Reviews budget for compliance relating to rate schedules: Estimated break-even reasonableness Structure of billing Allowability of costs / special items of cost, i.e. capital purchases Provides training for user community Assigns facility costs to Specialized Service Facilities Reviews special requests to Financial Officer, i.e. deficit carryovers Internal Audit Incorporate reviewing service center costs analysis, rate setting, and allowable cost testing in annual audit work plan

Components of a Program – Authority to Make Decisions Senior-level position (i.e. Financial Officer) Ability to deny some compliance, budget variances from policy. Command diligence from Budget Office and the Restricted/Sponsored Funds Department, program watchdogs.

Operational Challenges

Operational Challenges Convergence of Stakeholder Priorities: Finance Compliance Operations

Operational Challenges Invoice promptly, manage receivables, consider operations’ impact on cash requirements Charge all users established rates, don’t discriminate against federal awards, account for subsidies properly when necessary Compliance Operations Be solvent to stay in business, while meeting budgetary, operational, and compliance expectations Do not offer free services, consider allowability of costs when incurring operational costs, don’t bill if service has not been performed.

Real Life Challenges

Real Life Challenges Purdue Rutgers/UNC Charlotte

Wrap-up: Questions and Experiences

To Continue the Discussion Purdue Rutgers/UNC Charlotte

To Continue the Discussion/Questions: Hank Kirschenmann, Senior Manager Phone: 703-258-5892 hgkirschenmann@attain.com info@attain.com www.attain.com