The following web pages will provide guidelines for establishing or revising recharge rates for service units who provide services or goods to other University of Michigan units and/or to entities outside U-M.

If you are a service unit who charges others for your goods or services, your recharge rates must be reviewed and approved by the office of Financial Analysis and service unit billing (SUB) loader access must be obtained from Financial operations.

Why is this process necessary?
OMB circular A21 requires that "charges for service operations may be included as direct costs of sponsored agreements, provided such items are consistently treated …and charged under a recognized method of computing actual costs, and conform to the generally accepted accounting practices consistently followed by the university." A process must be in place to ensure that as an institution we are in compliance with A21. http://www.whitehouse.gov/omb/circulars_a021_2004/

This process also is intended to review rate charges to outside markets to make sure that the university is not unfairly competing due to its tax exempt status.

This review process aids in the determination of whether any revenue from outside the university, which is in excess of costs, is taxable by the federal government as unrelated business income.

What is a service unit?
A service unit provides services or goods to other university units or to various activities within its own unit. The costs for providing the services or goods can be easily and accurately identified and can be billed using an approved rate per unit. This will normally involve recording the costs and recharge revenue in the auxiliary - internal service fund.

The office of Financial Analysis will review the request to verify:

• The request is complete and understandable
• The department chair or comparable administrator signs the request
• Procedures are consistent with university policy
• Services are consistent with federal regulation
• Rate computations are complete and relate to actual costs
• The rate is reasonable

If approved, the office of Financial Analysis will:

• Notify the unit and Financial Operations with an approval memorandum that, for new rates, will include new chartfields and vendor ID information.

For further information or questions regarding recharge rates, please contact Tony Burger at
(734)764-9272.