University of California Davis Self-Supporting Recharge Operations - Monitoring
Self-supporting recharge operations must operate on a break even basis. Therefore, units must make every effort to ensure that an activity does not generate a year-end deficit or surplus in excess of 15% of prior year expenditures. If the activity is subject to seasonal fluctuations, then a calendar year or other 12-month period may be used to evaluate the surplus or deficit.
Account managers are responsible for monitoring self-supporting recharge activities and ensuring that only expenses necessary to provide the good or service are posted to the self-supporting account(s), particularly the salaries that were included in the rate. In addition, an annual expenditure to revenue reconciliation must be performed at least every 2 years to determine the need for any necessary rate adjustments. Units must address any surpluses or deficits that are in excess of 15% of the activity’s annual expenditures within three years. If the plan to resolve the surplus or deficit requires a rate change, then refer to the Rate Proposal/Rate Modification section.
When viewing FIS DS reports, it's important to remember that looking at self-supporting funds is different from looking at general funds. The table below illustrates the difference between general funds and self-supporting funds:
Budgets are appropriations
Budgets are revenue estimates
Expenditures are limited by budgets
Expenditures are limited by earned revenue
General Ledger reports are analyzed left to right (budget vs. expense)
General Ledger reports are analyzed downward in the Expenditures column (revenue vs. expense)
If the activity has more revenue or more expenses than expected, then find out why.
Possible issues with more revenue than expected:
- rate had depreciation or reserve for improvement, but it was not set up by General Accounting;
- all expenses associated with the activity are not being posted to the account;
- actual costs is lower than estimated cost used in the rate calculation;
- there is a cost savings or efficiency due to larger than expected volume.
Possible issues with more expenses than expected:
- actual cost is higher than estimated cost used in the rate calculation;
- expenses not associated with the approved rate are posting to the account;
- billing is not current.
It is important to note that balance sheet object totals (object 0299) should not always be included in the review.
Include Balance Sheet when:
- Reconciling your ledgers
- Reallocating the unexpended balance from the prior year
Exclude Balance Sheet when:
- Budgeting for the year or revising the budget
- Monitoring your revenue and expenses
Finally, it is important to keep in mind that the monthly financial reports often include the full NUD and markup since the assessment process is run on a quarterly basis.
Useful Financial Reports
The following Decision Support financial reports are useful tools to help monitor self-supporting recharge operations and activities:
- FIS 1 - Balance Summary
- This report provides account balance and total charges accumulated. Run it by your fund number to see a snapshot of your activity.
- FIS 2 - Transaction Listing
- Use to see transaction details of the charges and credits which have hit your accounts.
- FIS 14 - Object Code
- To view a full list of object codes utilized by self-supporting activities.
> In KFS, click the Reference Tables tab, click Object Code, enter ES in the Object Type Code field, then press Enter on your keyboard or click Search.
> In FIS Decision Support, use Object Lookup (14); enter ES in the Object Type field.
- FIS 193 - Statement of Operations-Self-Supporting Compliance
- This is a high-level summary of operations at a point in time. It is used by departments with self-supporting funds to monitor their overall activity by fund. It is set up to report a summary year-to-date income statement with total revenue (external income and recharges) and total expenditures, net income/loss for the period, the fund beginning balance (net accumulated surplus/deficit), any adjustments to the fund balance (STIP interest earnings for the period), and the total ending fund balance (sum of the beginning fund balance, adjustments, net surplus/deficit).
In general, the Self-Supporting Compliance Report allows departments to monitor recharge funds to ensure that the ending balance of a fund is in compliance with PPM 340-25 requirements for deficits/surpluses in recharge funds. Current policy requires that any accumulated deficit or surplus over 15% of the prior year expenditures must be immediately addressed by the department.
FIS193 has two report modes. A separate FAQ is available from Accounting and Financial Services for the Statement of Operations report. For information on self-supporting activities, choose Self-Supporting Compliance Report mode.
Below are explanations of the parameters to use:
Organization/UC Fund: This report can be run by organization or by specific UC fund(s).
UC Fund Totaling: “Total Across UC Funds” will give you one summary of all funds. For this report you will want to choose “Report UC Funds individually” to get the correct information by fund.
Self-supporting Income Type: For the Self-Supporting Compliance Report, select “Recharge Income Only”. The results will not bring back data for income-only accounts. Units with recharges are required to be within the surplus/deficit threshold. Income-only accounts do not have this limitation. Choose “All Income” when you want to review all of your revenue generating accounts. This should be run once a year to identify revenue accounts that are in deficit regardless of type."
Minimum Under/Over Percent: For the Self-Supporting Compliance Report, enter “15” in this field if it does not default to the 15% threshold. Funds that are in compliance will not show on this report. If you would like to see all of your funds then enter “0” (zero) in this field.
- FIS 199 - Object Code Summary by SFGT
- Enter your unique recharge object expense code from July to the current month to find out if your activity charged federal contracts and grants. The federal sub fund group types are: B, C, F, N, V, W, and X.
- FIS 210 - Annual Summary by Object Group
- Review budget to actual expense at mid-year and make adjustments, if needed. Can be run by available or spent. Can project to year end based on prior year or average to date. If your activity is cyclical, use prior year. In the results, the Income section includes NUD and markup unless moved into reserves. RFI and Equipment Depreciation will appear as expenditures.
- FIS 409 - AR Aging Report
- To view a full list of outstanding receivables, enter the billing Organization for the current fiscal year and month to obtain a list of unpaid invoices. Departments should monitor and address outstanding invoices in a timely manner.
The office of Budget & Institutional Analysis (BIA) along with Costing Policy & Analysis (CPA) must annually review the overall performance of all recharge activities. The purpose of the review is to identify activities that demonstrate signs of non-compliance and whose risk profile may have changed. BIA will focus on activities that have significant year-end surplus or deficit balances. In addition, recharge activities with no income or expense activity during the past fiscal year will be reviewed and closed as needed.
The FIS 193 report will identify the funds that are not in compliance with the requirement that recharge activities must operate on a break-even basis. Units must make every effort to ensure that a recharge activity does not generate a year-end deficit or surplus in excess of 15% of annual expenditures. The ratio is developed by dividing the net income or loss by the total expenditures (example below). Two ratios are included for your review, one for year-to-date and one for accumulated balance. The accumulated balance percentage is what will be reviewed by BIA for compliance reporting. The year-to-date figure is shown to see if the problem is from previous years or is continuing with the current year. This report will identify those activities. This must be done annually as part of the campus review process. However, this is also a useful report that can be used by the activities to monitor their balances.
As outlined in the Guidelines for Deficit Management and Monitoring in Campus Units, following the end of any given fiscal year, data from the FIS193 reporting is utilized to generate the Recharge Operation 193 Compliance Report for each Unit. The results are posted to the Unit's individual BOX folder (BIA Document Sharing > Unit Folders). Please contact your Dean/Vice Chancellor Office for a copy of the file if you are not authorized user as access is limited.
As part of the workflow process, departments will work with their Dean/VC office to validate the parameters of each fund listed on the Recharge Operation 193 Compliance Report. Additional information on this step is outlined in the Recharge Compliance Workflow Instructions (PDF). Templates for recharge operations requiring action plans can be found in the appendix of the deficit guidelines linked above.
Units maintaining supply inventories in excess of $50,000 as part of a recharge activity must maintain perpetual inventory records. For detailed information, see PPM 350-60, Management of Major Supply Inventories and PPM 330-11, Departmental Financial Administrative Controls and Separation of Duties.