The Three R’s - University of Michigan.pptVIP

The Three R’s Recharge, Rebill and Reimbursement * What does this document cover? Understand the key characteristics of each of the three R’s Understand the underlying accounting concepts that provide guidance on how these activities should be recorded Understand how to apply the accounting procedures * What is a Recharge? Distinguishing Characteristics – Recharge A recharge is a charge for goods or services provided by one internal university unit to other internal university units Rates must be approved by the Office of Financial Analysis These revenue generating (recharge) activities have rate structures that include direct costs such as technicians to maintain testing equipment, office staff to administer billing and timekeeping, supplies consumed and the cost of equipment maintenance contracts; etc. Units who recharge usually operate in the auxiliary fund range, and most typically in the Internal Services Fund (52000) Example: A Chemistry Lab analyzes samples for another academic department The Chemistry department charge the academic department’s chartfields at an expense account 613225 (Chemical Analysis Fees) The Chemistry department records recharge revenue on their chartfields at account 410000 (General Recharge Revenue) * Accounting for Recharge Activity Recharge activity must be billed through the Service Unit Billing (SUB) process Changes to the SUB process Additional required fields (Fall 2014) Contact Financial Operations/Shared Services for training or questions about the SUB process Contact the Office of Financial Analysis for questions about recharge * What is a Rebill? Distinguishing Characteristics – Rebill A rebill is a specific type of cost transfer: Moving the original cost of a good/service from the unit that was originally charged to the unit that utilized the good/service Rebill activity is not revenue generating because the unit receiving funding is receiving a reduction in expense A rebill can be made between most operating f