Auxiliaries and Service Centers

Auxiliaries are self-funded entities that support the university's teaching and research mission. Revenue is generated from the services provided to faculty, students, staff, and the Stanford community. Auxiliaries include Residential & Dining Enterprises and the Department of Athletics.

Service centers are organizational units of the university that provide a specific service, group of services, or products to users principally within the university. Many service centers are within a school or department, usually serving specific client groups or needs, most often instruction and research. Most service centers are of this type, and are run on a fiscal year breakeven basis. These centers provide services ranging from shops and labs, to specialized computer facilities, to departmental radiology centers.

Service center revenue is direct charges to users for their services and/or products based on a nondiscriminatory rate. Service center revenue must be no more and no less than the estimated aggregate cost of the service or product over a fiscal year (an over- or under- recovery that is within 5% of total expenses is allowed for nonacademic service centers, and within 15% for academic service centers). Refer to the Service Center Manual on the DoResearch website for more information.

Meeting the requirements of matching revenue to expense in a fiscal period may require timely action to recognize revenue or make adjustments in order to account for activity which has occurred but has not posted in the period. Refer How to: Create an Accounts Payable (AP) Accrual Journal and How to: Create an Accounts Receivable (AR) Accrual Journal for more information.

Because of the unique nature of each auxiliary and service center, department operations with regard to budget and finance may vary. However, each department should create a written set of desk procedures that provides detailed instructions for properly recognizing and recording revenue in alignment with the following guidelines:

• Revenue recognition – Revenue is recognized based on accrual accounting in accordance with GAAP. Revenue is recognized when earned, and expenses are recognized when incurred. Revenue is considered earned when the university has substantially met its obligation to be entitled to the benefits represented by the revenue. Revenue is recorded when earned, regardless of the timing of cash receipts. Deposits (whether refundable or non-refundable), early payments and progress payments are not recognized as revenue until the revenue producing event has occurred.
• Deferred revenue – Deferred revenue results when cash is received in advance of revenue being earned, and is recorded as a liability until it is earned. Once earned, the liability is reduced and revenue is recorded in the general ledger. When recording cash receipts, it is important to determine whether the cash represents payments for recognized revenue or deferred revenue.
• Accruals and cut off – Revenue is recognized in the period in which it was earned regardless of the timing of billing. At the end of each month, revenue that has been earned but not billed or received is accrued and recorded as revenue in that month. An asset (accounts receivable) is recorded on the balance sheet for the revenue that was earned but for which payment is not yet received.
• External, intercompany, interdepartmental and intradepartmental revenue – Revenue is recorded based on the revenue source. Revenue earned from external parties (also known as third parties), is recorded as external revenue. External parties are persons or entities over whom Stanford has no fiduciary control. This category includes commercial enterprises, other universities, and also Stanford faculty, staff or students if revenue is for personal goods or services. Revenue earned from separate legal entities that are owned by Stanford is recorded as intercompany revenue. Examples of intercompany entities are the hospital entities and the Stanford Linear Accelerator Center. Revenue earned between separate departments of the university is recorded as interdepartmental revenue. Revenue earned within a single department of the university is recorded as intradepartmental revenue.

To support reporting requirements for Auxiliaries & Service Centers, there are several OBI reports available:

• For the break even percent with revenues and expenditures year-to-date as of the month selected, annual revenue/expense controls (budget), GL Period range actuals and variance, refer to the OBI Revenue and Fund Management Dashboard: Operating Statement and Clinical Trials Statement.
• For month-by-month revenue and expense by object code and expenditure type, respectively, refer to the OBI Revenue and Fund Management Dashboard: Operating Statement Month by Month Tab.
• For a variety of reports showing expenditures only, but with full details from the Oracle Grants Accounting module not available in Revenue and Fund Management reports, refer to the OBI Consolidated Expenditure Reporting: Home Tab.