Business Procedures Manual

Fiscal Affairs Division

15.5 Auxiliary Revenues and Net Assets

(Last Modified on December 13, 2010)

The reserves of auxiliary enterprises may include reserves for renewals and replacements, reserves for subsequent years鈥 expenditures and reserves for investment (improvements) in plant.

Note: For Fiscal Years 2009 through 2012 only, the Board of Regents Reduction Plan allows institutions to use reserves of auxiliary enterprises for general operating purposes.

Institutions are required to fund current year depreciation as an addition to the renewal and replacement reserve. The renewal and replacement reserve can be used for renewal and replacement of capitalizable assets only. Items that do not meet the capitalizable threshold should be funded from the reserve for subsequent years鈥 expenditures (funds generated from operating profits). The renewal and replacement reserve can be used for capitalizable expenditures that extend the useful life or improve the performance of an asset.

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