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POLICIES AND PROCEDURES APPLICABLE
TO
AUXILIARY ENTERPRISES/SERVICE UNITS
 o new Auxiliary Enterprises or Service Unit activity will be created nor will any be
deleted without approval of the President and the Board of Regents. Annually, each Auxiliary
Enterprise and Service Unit shall be reviewed to ensure that each continues to provide beneficial
service to the University of Oklahoma. This review should include an assessment of the
potential impact of any current unrelated business income regulations. This review shall be
initiated by the operating management of each unit and be submitted as a part of the annual
operating budget process.
- Annually, the Controller's Office shall review all Agency Special accounts which
have been inactive for at least one complete fiscal year (July 1 through June 30). Each sponsor
of an "inactive" account will be contacted to determine the status of the
organization, any restrictive covenants, and the intent to expend the remaining balance.
Accounts which remain in "inactive" status after this process will be
recommended by the Controller to the Vice President for Administration and Finance and the
President for closure into the Auxiliary/Service Unit Reserve(s) account unless otherwise
restricted by externally designated covenants.
- The primary responsibility for managing and operating each unit shall be with the
operating manager of each Auxiliary Enterprise and Service Unit. Each operating manager shall
develop budgets, operating plans, and monitor the financial status of the entity. These financial
oriented functions shall be periodically reviewed and approved by the Dean or Director in the
organization structure applicable to the entity. The Controller shall be responsible for the overall
fiscal monitoring of all Auxiliary Enterprise Entities and Service Operations and shall develop
uniform financial reporting policies and procedures for these entities.
- Each Auxiliary Enterprise and Service Unit shall develop a comprehensive procedure
manual documenting the policies, procedures, standards, and other administrative and operating
criteria applicable to each unit. This manual should be maintained on a current basis and made
available to internal and external auditors and the Controller's Office.
- University of Oklahoma Auxiliary Enterprises and Service Units should be charged for a
share of general administrative expenses, as well as their direct operating expenses, including
debt service and provisions for renewal and replacement of fixed assets used in the operation of
the unit. The Controller's Office shall periodically calculate the overhead rate to be charged each
Auxiliary/Service Unit. The overhead rate shall be approved by the President. The overhead
charge shall be assessed each unit on the basis of the gross revenue generated by
the operations of the unit.
- Auxiliary Enterprises and Service Units shall develop formal documented procedures
outlining their operating philosophy and pricing criteria. The procedures must include the
processes for evaluating costs and determining prices, fees, charges, etc., and follow the
guidelines stated in the manual, "Auxiliary Enterprise/Service Unit Fiscal Policies and
Procedures -- Implementing Guidelines". Prior to the development of each unit's annual
operating budget, a "Statement of Changes in Operating Environment" must be prepared
and approved by the President, Provost or appropriate Vice President through established
University procedures. A copy of the approved "Statement of Changes in Operating
Environment" shall be submitted to the Budget Office. Any required revisions to
the annual "Schedule of Charges" shall be reviewed and approved through
established University procedures.
- Auxiliary Enterprises and Service Units shall develop budgets, operating plans, and prices
to include the funding of reserves for renewals and replacements, required debt service, planned
capital improvements, and general operating contingency reserves. The amount of each reserve
shall be determined by the nature of the reserve.
Renewal and Replacements -- should be based upon depreciation schedules for
fixed assets used in the operations of the unit. Generally, the IRS depreciation asset classes
should be used to determine the appropriate depreciation rate. As a general guideline, annual
additions to this reserve should approximate the annual depreciation expense.
Required Debt Service -- determined by debt instrument (e.g. bond resolution).
Planned Capital Improvements -- should be based upon approved plans and
should be identified by specific project.
General Operating Contingency -- as a general rule, a 5% reserve should be
funded. Reserves in excess of 5% should be authorized by the President on a case by case basis
upon thorough review of the rationale and justification.
The accumulated balances in each reserve account shall be disclosed in each entity's Balance
Sheet. Each June 30, a unit's cash in excess of additions to authorized reserve accounts and
working capital requirements shall be transferred to Auxiliary/Service Unit Reserve(s) on
approval of the President.
- Auxiliary Enterprises and Service Units shall develop annual operating budgets that set
formal financial goals for each unit. Budgets shall follow overall University budget policy and
shall include the total financial operation of the unit. Budgets should be prepared on the basis of
historical data, projected short-range trends, and long-range financial objectives. Prices, fees,
and rates should be established to fully fund the total financial obligations of the unit. Units
which cannot price their goods and services and be competitive with comparable goods and services
available from the private sector should be evaluated for discontinuance.
To
facilitate this evaluation, annually each Auxiliary Enterprise and Service Unit shall be reviewed
to ensure that each unit continues to provide some beneficial service to the University. Units
providing a beneficial service to the University, but unable to establish competitive prices, fees,
and rates sufficient to fund its operations should include in its budget, approved subsidies from
other fund sources. This review shall be initiated by each unit's operating management and be
submitted as a part of the annual operating budget process.
- The Vice President for Administration and Finance shall maintain a centralized financial system
which provides an accrual basis accounting system for all Auxiliaries and Service Units.
Auxiliaries and Service Units are required to process all financial transactions through the
centralized system on an accrual basis and to prepare uniform statements and reports.
- No Auxiliary Enterprise or Service Units shall be permitted to operate using unauthorized
borrowing from other units. Short-term (less than 12 months) operating cash flow loans may be
authorized by the Controller. The operating manager of both entities must agree to the
short-term loan. All short-term loans must be fully reported and disclosed on the financial
statement of the affected units.
Periodically, a report of these short-term operating cash flow
loans shall be made to the President and Regents indicating the criteria for the loan and the
expected repayment date. Long-term (over 12 months) loans may be made only with the
approval of the President unless in excess of $75,000, in which case the approval of the President and the
Board of Regents shall be required. Completion of the
Loan Authorization Form is required in either case.
- Transfers between Auxiliary Enterprises and Service Units shall be permitted only when
fully justified and agreed to by both operating managers. Transfers less than $75,000 shall be
approved by the President and reported to the Board on a semi-annual basis. Transfers shall not
be split to circumvent the dollar limitation prescribed herein. Transfers of $75,000 or more shall
not be made until approved by the President and Board of Regents. Completion of the
Transfer Authorization Form is required.
- Beginning with the fiscal 1989-90 operating budget, overhead reimbursements from
Auxiliary Enterprises and Service Units were recorded in the University's revolving fund in the
E&G budget.
- Investment earnings from the investment of idle cash by an Auxiliary or Service Unit shall
be deposited to the Auxiliary or Service Unit as investment income. All investments shall be
made in accordance with Regents' policy for the investment of temporarily idle cash. All
investments shall be made by Financial Support Services.
An Auxiliary Enterprise
or Service Unit will be permitted to participate in the short-term investment pool upon the
completion of the "Short-Term Pooled Investment Fund
Request for Investment/Redemption" form. Participation in the investment pool is
identified by the number of units assigned to each entity. Investment pool income is distributed
monthly in proportion to the number of units allocated to each entity, net of any associated
investment and/or administrative fees.
- The Controller's Office shall maintain a comprehensive manual to facilitate the
implementation of the fiscal policies and procedures affecting Auxiliary Enterprises and Service
Units. This manual, "Auxiliary Enterprise Entity/Service Operation Fiscal Policies and
Procedures", shall be the official reference for University
policy and procedure and shall be maintained on a current basis by the Controller's Office. In
addition, the Controller's Office shall provide assistance to Auxiliary Enterprises/Service Units in
the establishment of effective and efficient financial procedures within the units which comply
with the policies and procedures.
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