Financial Management

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MOU Procedures

PURPOSE: 

  • To document an agreement between two campus entities where one party will provide services to another. The service provider will recover from the service recipient the costs associated with providing these services. An MOU is not a substitute for a contract of services with an off-campus entity. Service contracts with off-campus entities should be arranged through Purchasing and Contracts Administration.
  • An MOU or contract of services must be approved before services are performed. MOUs will be processed annually and must be submitted to Financial Services no later than June 15th. (If June 15th falls on a weekend the deadline will be the following Monday).
  • An MOU Cost Recovery Worksheet is required for each MOU. An MOU document submitted without a Cost Recovery Worksheet will be returned to the service provider.
  • When completing an MOU Cost Recovery Worksheet, enter actual costs and totals. If the actual costs are unknown, enter your best estimate. Worksheets with “TBD” will be returned to the service provider.
  • An existing MOU may be amended if necessary due to cancellation, change of service, change in the rate for services, or an extension of the time covered by the agreement (ie original MOU for fall semester, extended to cover the spring semester).  The Amendment form should be completed prior to providing services, but at least five days prior to billing for services rendered under the amendment. An Amendment is not required when the original MOU is based upon an estimated number of transactions.   
  • To comply with Executive Order (EO) 1000-Delegation of Fiscal Authority and Responsibility.

TYPES OF MOU ENTITIES:

  • Auxiliary Corporations; the Associated Students Incorporated (ASI), CSUN Foundation, North Campus Corporation, The University Corporation (TUC), and the University Student Union (USU).
  • Enterprises; TSENG College of Extended Learning (ExL), Health Facilities, Parking Services, and Housing.
  • General Operating Fund Entities; (485xx) any subdivision (e.g., center, department, college, division) of the University that is providing services to another campus entity.
  • Cohorts (Agreements made between the Tseng College of Extended Learning (ExL) and a college). Review Memorandum of Understanding Procedures for Cohorts.

TYPES OF COST RECOVERY AND REIMBURSEMENTS NOT REQUIRING AN MOU:

Documents that articulate the agreements listed below are required.

  • Between General Operating Fund Entity providing services to another General Operating Fund Entity
    • Costs to be recovered by the service provider under the agreement should include only salaries/wages and operating expenses.  Benefit costs should be excluded.
    • Payments should be made via the on-line budget transfer system. It is not necessary to send any documentation to Financial Services.
  • Space Rentals/Leases
  • Student Assistant Agreements
  • Service Agreements

TYPES OF COST RECOVERY AND REIMBURSEMENTS REQUIRING AN MOU:

Between General Operating Fund Entity providing services to an Enterprise:

  • MOU Agreement is required.
  • MOU Cost Recovery Worksheet between a General Operating Fund Entity and an Enterprise must be submitted with the MOU document.
  • The service provider must categorize the reimbursement by (1) Salaries, (2) Benefits, and (3) Operating Expenses.
  • A separate MOU Cost Recovery Worksheet is needed for each Department to be reimbursed by MOU
  • Submit the signed MOU form and MOU Cost Recovery Worksheet(s) to Financial Services (MD 8337), at which time a MOU reference number will be assigned.
  • Upon receipt of a Transfer of State Funds Request Form, a journal entry based on the MOU Cost Recovery Worksheet will record the reimbursement in Fund 543xx using the following accounts for the service provider:
      • 580814—Department MOU Rev O & E
      • 580815—Department MOU Rev Salaries. Salary must be further broken out by the type of salary being reimbursed using the appropriate class code: 1) 99991 Management Salaries, 2) 99992 Support staff salaries, 3) 99993 Faculty Salaries, and 4) Student Wages.
      • 580816—MOU Benefits Reimbursement
    • The journal entry will record the payment by the service recipient in account: 617001—Service from Other Funds/Agencies.
    • As part of month-end closing, allocation processes will charge:
        • The standard overhead rate of 2.75% against the revenue (service provider) transaction.
      • Revenues and expenses for each department must net to zero at year end. Beginning July 1st, 2015, a number of monthly allocations will be run to transfer expenditures from fund 48501 to fund 543xx. No expenses or encumbrances may be processed to these funds unless they have opted out of the allocation process. Based upon the account numbers and class codes used to record the MOU revenue, the monthly allocation process will record the following:
          • Salaries and Wages will be transferred to/from salary and wage expenditure accounts based upon account code 580815 and the class code selected as noted above.
          • Worker’s Compensation will be charged based upon 3% of all salary and wage.
          • Benefits will be transferred to/from account 603890 the Benefits pooled account based upon the Revenue in account 580816.
          • Operational expenditures will be transferred based upon the amount credited in account 580814, with 60% being transferred from Supplies and Services, and 40% from Expenses – Other
        • The service provider may move expenditures as necessary for their departments utilizing a Journal Entry Form.
        • A State Trust account application must be on file for a service provider before using Fund 543xx.

        Between Enterprises

        • MOU Agreement is required.
        • MOU Cost Recovery Worksheet between Enterprises must be submitted with the MOU Agreement.
        • Submit the signed MOU form and MOU Cost Recovery Worksheet to Financial Services (MD 8337), at which time a MOU reference number will be assigned.
        • Upon receipt of a Transfer of State Funds Request Form, a journal entry will record revenue to the service provider using the following account: 580896—Revenue.
        • The journal entry will record the payment by the service recipient in account: 617001—Service from Other Funds/Agencies.
        • As part of month-end closing, an allocation process will charge the standard overhead rate of 2.75% against the revenue (service provider) transaction.

        Between a General Operating Fund Entity providing services to an Auxiliary Corporation

            • 580825 - Reimbursement Salaries and Wages from Auxiliary Corporations.  Salary must be further broken out by the type of salary being reimbursed using the appropriate class code: 1) 99991 Management Salaries, 2) 99992 Support staff salaries, 3) 99993 Faculty Salaries, and 4) Student Wages.
            • 580826 – Reimbursement Benefits from Auxiliary Corporations
            • 580824 – Reimbursement Operating Expenses From Auxiliary Corporations.
          • As part of month-end closing, allocation processes will charge:
              • The standard overhead rate of 2.75% against the revenue (service provider) transaction.
            • Revenues and expenses for each department must net to zero at year end.  Beginning July 1st, 2015, a number of monthly allocations will be run to transfer expenditures from fund 48501 to fund 544xx. No expenses or encumbrances may be processed to these funds  unless they have opted out of the allocation process.  Based upon the account numbers and class codes used to record the MOU revenue, the monthly allocation process will record the following:
                • Salaries and Wages will be transferred to/from salary and wage expenditure accounts based upon account code 580825 and the class code selected as noted above.
                • Worker’s Compensation will be charged based upon 3% of all salary and wage.
                • Benefits will be transferred to/from account 603890 the Benefits pooled account based upon the Revenue in account 580826.
                • Operational expenditures will be transferred based upon the amount credited in account 580824, with 60% being transferred from Supplies and Services, and 40% from Expenses – Other  

              Between an Enterprise providing services to an Auxiliary Corporation:

                  • 580891—Revenue—The University Corporation (TUC)
                  • 580892—Revenue—CSUN Foundation
                  • 580893—Revenue—Associated Students Incorporated (ASI)
                  • 580894—Revenue—North Campus Corporation
                  • 580895—Revenue—University Student Union (USU)
                • As part of month-end closing, an allocation process will charge the standard overhead rate of 2.75% against the revenue (service provider) transaction.

                AMENDMENTS TO MOU AGREEMENTS:

                • Existing approved MOUs may be amended for the following changes:
                    • Cancelation, services no longer needed and or provided. 
                    • Extension of time the MOU covers; for example the original MOU is for the Fall semester, and it is being extended for the Spring Semester
                    • Rate change for services
                    • Change in the scope of services
                  • The MOU Amendment Form is required for all changes noted above:
                      • Fill in the original approved MOU #
                      • Check the appropriate box indicating the reason for the change
                      • Describe in detail the reason for the change to the original MOU
                      • Complete a new Cost Recovery Worksheet
                      • The MOU Amendment Form and the new Cost Recovery worksheet must signed and dated by both departments.
                    • Submit the signed MOU Amendment form and MOU Worksheet to Financial Services (MD 8337), no later than five working days prior to billing for services.
                    • An Amendment is not required when the original MOU is based upon an estimated number of transactions.

                    COST RECOVERY CALCULATION METHODOLOGIES:

                    The methodology for calculating costs to be recovered through an MOU must be reasonable and related to the services performed.

                    Below are frequently used approaches for calculating costs eligible for recovery:

                      • Actual full or prorated costs of salary and benefits for a specific faculty member or staff employee who provides services directly to another campus entity.
                      • Prorated salary, benefits and operating expenses where a department provides services to another campus entity, and the work is done by multiple employees. In this situation, salary and benefit costs should exclude employees above the first level of supervision. Operating expenses should include depreciation for equipment, but should not include costs for space, furniture and fixtures. Operating expenses typically are allocated in the same proportion as salary cost, but other models may be appropriate. The 2.75% overhead charge may be included in Operating Expenses. Examples of this methodology might include departments such as Human Resources and Information Technology.
                      • For service providers that provide measurable services, it may be appropriate to determine cost per transaction or event. Examples of this methodology might include invoices prepared, parking permits sold or number of vouchers.

                    RESPONSIBILITIES:

                    The manager of each department providing reimbursable services of an on-going nature to any other department shall initiate a Memorandum of Understanding as described in the above procedures.

                    Completed MOU Agreements must be submitted to Financial Services for final approval (MD 8337). The Associate Vice President of Financial Services will approve and verify that all MOUs are in compliance with University and State policies. All parties will receive a copy of the approved MOU via email.

                    In the event that an amendment is necessary, it is the responsibility of the department providing the services to submit to Financial Services for final approval (MD 8337) the completed the MOU Amendment form and the new MOU Cost Recovery worksheet at least five working days prior to initiating any invoicing or transfer of funds documents.

                    It is the responsibility of a department requesting services not covered under the terms of an MOU to complete an appropriate chargeback requisition form. Upon completion of services, the services provider must request the Office of Resource Management within Financial and Accounting Services to charge the expense to the services requestor and credit the appropriate revenue to the service provider.