aka - Internal Service Funds

Internal Service Funds are established to finance, administer, and account for departments or agencies of a government whose exclusive or nearly exclusive purpose is to provide goods and services to the government's (e.g. NDSU's) other departments on a cost-reimbursement basis.

(i.e., internal NDSU Customers)

(Governmental & Non-Profit Accounting - 9th Edition)

Economy, efficiency, effectiveness is managing resources involving common goods or services used by several departments
Facilitate equitable sharing costs among departments served.

Telecom
Postage
Electron Microscope
Facilities Management Labor & Supplies
Copy & Print Services
Lab Equipment
State Fleet Vehicles
Airplane

Generally Accepted Accounting Principles
Federal Regs - 2 CFR 200
NDUS Guidelines
ND State Auditors Office
NDSU Grant & Contract Accounting

Fund Range 22000 - 22999
Revenue Codes 479005 - 479020
Revenues closed against expenses for fiscal year-end University-wide financial reporting

May be used, but discouraged (Per NDUS Guidelines)
Pros
 - Good detail for management decisions
Cons
 - Limits flexibility

Documented support for rates
Break-even pricing
- Based on actual or estimated costs divided by actual or estimated outputs consumed
- Cost recovery only
Consistent & fair pricing to all users
- Regardless of funding source
Avoid duplication of costs in grant F & A rates
Year-end balances minimal
- 60 day rule

High year-end balance may indicate overpricing
- Net Assets should be less and 2 months of expenses
- Accumulated depreciation of capital assets may be used to reduce Net Assets
Assets less liabilities = Net Assets
Average monthly expenses times 2

Diverts restricted resources to other purposes
Disallowed by federal government
- Penalties
- Credits back to hundreds of grant awards
- Disallowance of future awards

Must be directly related to the goods or services provided to user departments
- Matching concept - match revenues & expenses
Transfers to unrelated activities prohibited
Inappropriate expenses
- Indicator of overcharging

Reviewed by Grant & Contract Accounting
- Rate Justifications/Documentation
- Conflicts with F & A rate agreement
- Disclosure to Feds (significant activities)