NACUBO defines an auxiliary enterprise as an entity that exits to furnish goods or services to students, faculty, or staff, and that charges a fee directly related to, although not necessarily equal to, the cost of the goods or services. The general public may be served incidentally by some auxiliary enterprises. The distinguishing characteristic of auxiliary enterprises is that they are managed as essentially self-supporting activities. Examples are residence halls, food services, intercollegiate athletics (only if essentially self-supporting), college stores, faculty clubs, faculty and staff parking, and faculty housing. Student health services, when operated as an auxiliary enterprise, also should be included. Every Finance System program and project is assigned an Expense Purpose Code (EPC) attribute. This is used to define the functional classification of all expenses of that FOPPS for our financial statements as follows.
1100 - Instruction
1200 - Research
1300 - Public Service
1400 - Academic Support
1500 - Student Services
1600 - Institutional Support
1700 - Operation of Plant
1800 - Scholarships and Fellowships
1900 - Hospitals and Clinics
2000 - Auxiliary Enterprises
2100 - Internal Service Units
2200 - Other
The importance of knowing if a FOPPS is defined as an "auxiliary enterprise" is so that you know what revenue accounts to use for that FOPPS. Auxiliary Operating Revenue is one of the revenue lines reported in our financial statements. The NACUBO definition of "auxiliary enterprise revenue" is all revenue generated through operations of an auxiliary enterprise. Therefore, if a FOPPS is defined as an "auxiliary enterprise" (EPC 2000), then the only revenue accounts that can be used for that FOPPS are 280000 - 289999, Auxiliary Enterprise Revenue. A word of caution: all of our 2x funds include the word "auxiliary" in their title.
20 - Auxiliary-TABOR Enterprises
26 - Auxiliary-Other Exempt
28 - Auxiliary-ISU
29 - Auxiliary-Non-enterprises
That does not mean that all 2x fund FOPPS are auxiliary enterprises. Only those programs with EPC 2000 are auxiliary enterprises. You can see in the Finance System the expense purpose code of the program in your FOPPS by navigating to: General Ledger > Chartfields > Program. Enter the program number and press the Search button. Select the Program CU Attributes tab and then locate the Exp Purpose Code. (5/02)
In simple terms, it’s like a tax that the University levies on those fund groups that benefit from University services and support but would otherwise not pay for them. The General Administrative and Infrastructure Recharge (GAIR) is a combination of the General Administrative Recharge (GAR) and the General Infrastructure Recharge (GIR). Although the two have their own rates and are calculated separately in the Finance System, they are often referred to together as GAIR. GAIR is only applied against expenses, not cash transfers. Current GAIR rates are posted on the ABS Cost Accounting webpage.
General Administrative Recharge (GAR): A percentage rate charged to auxiliary and self-funded funds (20, 26, 28, 29) and their renewal and replacement plant fund (78) and to agency funds (80). GAR is calculated monthly on expenditures and paid to the general fund in recognition of the general fund administrative expenses incurred in support of the auxiliary and self-funded activities. This is a cost allocation methodology to recognize that the general fund incurs general administrative costs such as accounting, payroll, employment, purchasing, accounts payable, etc. in support of the auxiliary and self-funded activities. The general fund credit is to institutional support.
General Infrastructure Recharge (GIR): A percentage rate charged to auxiliary and self-funded funds (20, 26, 28, 29) and their renewal and replacement plant fund (78). GIR is calculated monthly on expenditures and paid to the general fund in recognition of the general fund administrative expenses incurred in support of the auxiliary and self-funded activities. This is a cost allocation methodology to recognize that the general fund incurs infrastructure expenses such as grounds maintenance, roads, sidewalks, etc. in support of the auxiliary and self-funded activities. The general fund credit is to operations and maintenance of plant. (1/06)
ISCs are established to provide goods and services to other University units, resulting in these units being charged an expense within their FOPPS. These are usually set up because of the efficiency or convenience of providing the services on campus rather than having to always use an outside vendor. Examples of ISCs are Copying and Printing, Mailing Services, Transportation Services, Chemistry Stores, and Telecommunication Services. ISCs will record all costs incurred to provide the goods/services such as cost of goods sold (inventory sold), salaries, wages, benefits, operating expense, travel, depreciation on equipment, etc. Interdepartmental revenue is recorded upon providing the goods/services to campus customers, including sales via the Procurement Card. Miscellaneous revenue is recorded for sales to private individuals and outside businesses including all agency fund (fund 80) sales.
ISC expense and IN revenue is not recorded only when the ISC is facilitating for a departmental customer the purchase of goods/services the ISC does not offer. A good example of this is in the Transportation Center (TC). There are some repairs that are beyond the scope of the TC. However, to provide good service to a campus customer, the TC will offer to facilitate procurement of the service from an outside repair shop. In this situation the TC can choose to record the expense and IN revenue as activity of the TC in the usual manner, or it can choose to record the expense as a pass through of the TC and have it recorded only as an expense of the customer department. If the TC chooses to show this as a pass through expense, the ideal situation would be to record the expense directly in the departmental customer FOPPS, and not show it going through the TC records. If the TC were doing this for an outside customer, then the TC would always show an expense of the TC and miscellaneous revenue. It is improper accounting to credit the payment from the outside vendor as a credit to the TC expense.