Policy on Service Centers (now Service Units)

Service Units: An Update on Revisions to Harvard's Policy

Why is the policy being revised?

Harvard's current service center policy was created in 1999 and is being revised to address changes made to accounting policies, to follow the University's new standardized format, and to ensure that we have a policy we can comply with. Since there is a trend of increasing scrutiny in this area from auditors as well as the government, one of the goals of the revision is to provide administrative infrastructure to help us comply with the policy. The policy's effective date will be July 1, 2007, but we should continue to comply with the current policy now.

What's new in the policy?

• Definitions and categories of “Service Units”
• Clarification of roles and responsibilities at the Department and School levels
• Establishment of a central committee (Service Unit Review Committee) with School and Central Service Unit (e.g. UOS, UIS) representation
• Annual submission of Service Unit Financial Practices Statements

What are Service Units?

University units that provide goods or services to other University groups and charge user fees for those goods or services are “service units”. Service units are established when it is too complicated to keep track of and allocate exact costs for services provided.

Types of Service Units:

1. Recharge Centers: Annual operating expenses are less than $500,000 and annual internal charges are less than $100,000 (under $50,000 in total operating expense are exempt).
2. Service Centers: Annual operating expenses are more than $500,000 and annual internal charges are more than $100,000.
3. Specialized Service Centers: Annual direct operating expenses are more than $1,000,000 and operations typically involve the use of highly complex or specialized facilities.

Why should you care?

As a recipient of federal funding, the University must comply with OMB Circular A-21. A-21 requires that service units charge according to actual usage at non-discriminatory rates calculated to recover actual costs (section J.47). Non-compliance could harm the University's reputation and reflect negatively on future award proposals, and could also lead to payments of reimbursements or fines to the government.

Who is responsible?

• Departments
• Financial Managers of Service Units
• Departmental Financial Managers
• School/Tub
• Financial Officers
• University
• Service Unit Review Committee (new)

[Last modified: 05/14/08]