Maintenance

Maintenance

Recharge Rate Monitoring and Recordkeeping

Recharge units are fiscally responsible for accurately recording costs and revenue associated with the recharge activity to the assigned chartfield. Units are also expected to monitor recharge balances on a regular (monthly recommended) basis.

What to do if there is a surplus or overdraft balance

When the recharge balance exceeds +/-5% of break-even, the recharge is considered to be out of compliance. If a unit calculates continued use of the existing rates will result in a non-compliance trend that will continue, the unit should submit an updated rate request to Financial Analysis to adjust the rate for the surplus or overdraft balance. This should occur even if the rate has not yet expired.

If your fund balance exceeds +/-5% of breakeven, a portion of that balance must be included to increase or decrease the rate as appropriate to bring the fund balance to the correct level.

  • Formula = Ending fund balance / Annual Revenue
    • Example: $525 / $2,500 = 21.0% => Not in compliance
    • Example: $50 / $2,500 = 2% => In compliance
  • For substantial balances that cannot be recouped in one year, units are granted three years in which to bring the balance into compliance. Units must indicate the intended recovery period on the cost detail. The adjustment is entered on the Adjustment for prior rate (surplus)/deficit line on the Cost Detail tab.
  • In addition to, or instead of, recovering deficits through a rate adjustment, units may fund that deficit, in whole or in part, from their discretionary funds.
  • Surplus balances may NOT be transferred out of a recharge chartfield. Recovery options for surpluses are limited to rate adjustments.
Records to Maintain

Units are responsible for maintaining financial documentation in support of the rate calculations and the costs billed to customers. Units should also be aware that recharge records are subject to audit at any time.

At a minimum, units should:

  • Document descriptions for the services performed
  • Document recharge procedures
  • Document internal control procedures to ensure accuracy of financial information
  • Maintain customer billing detail including:
    • Chartfields billed and billing amounts
    • Name of who requested services (these individuals should have ability to authorize costs billed to their specific chartfields)
  • Details for the expenses directly related to the recharge activity
  • Maintain records for seven years, or longer if a litigation claim or audit is initiated before the expiration date of this period.
Publishing Recharge Rate Information

Units are NOT required to publish recharge rate information on departmental websites. However, if the unit chooses to publish this information, all rates MUST match the rates as listed on the approval letter provided by Financial Analysis.

Recharge Activity Review Frequency

Units should monitor their activity balances on a monthly basis. In addition, recharge units should perform a full internal review of recharge activity at least annually.

Financial Analysis will review recharges in good standing on a bi-annual basis. When units have activity balances that are out of compliance, are for newer services, or are for services that have balances or activity that fluctuates greatly, reviews will be done on an annual basis.

A request to update the rate must be submitted to Financial Analysis one month prior to the rate expiration in order to keep the supplier ID (formerly vendor ID) active. Units may request a one-time three month extension to their original expiration date to allow additional time for analysis and to prepare the updated rate submission.

Supplier ID's will be inactivated once a rate has expired. Units are not allowed to bill against the recharge rate if the supplier ID is inactive. The supplier ID will not be re-activated until the unit has submitted an updated rate and Financial Analysis has issued the approval letter.

Changes in Recharge Activity

Any changes to recharge rates billed to customers must be approved by Financial Analysis prior to the unit billing customers for those services.

Notify Financial Analysis to update an existing recharge:

  • by emailing the updated rate calculation request to recharge@umich.edu
  • when adding, changing or deleting services
  • when there are changes to a recharge chartfield, such as department ID
  • to terminate a recharge (see below for more information on rate terminations)
Terminating a Recharge Rate

Contact Financial Analysis at recharge@umich.edu to terminate a recharge.

  • Financial Analysis
    • Reviews balance activity to validate that all outstanding transactions were recorded
    • Notifies Supplier Maintenance (formerly Vendor Maintenance) to cancel the supplier ID
    • Notifies the Shared Services Center to inactivate the associated chartfields
  • Shared Services Center
    • Works with units directly to clear any remaining balances