Policy and Procedure Updates

Agenda o Policy o Procedures o Roles & Responsibilities o Definitions o Questions & Answers anytime during the presentation

Policy
Selling Goods and Services to University Departments o Rates should be reviewed annually by the department in accordance with Administrative Procedure: Reviewing Internal
Sales Activity o Updated Internal/External Sales Approval Form (UM1608) o Updated Internal/External Sales Business Proposal (UM1741) o Updated Internal Sales Vendor Authorization Form (UM1793) o New Procedure: Reviewing Internal Sales Activity by Internal
Sales Office

Policy
Selling Goods and Services to University Departments
(continued) o Transactions require:
• Cost substantiation
• Justification
• Proper record retention
• Transactions must be charged to departments within 60 days from the day the product or service was provided
• Subsidies should be documented in the rate development

Procedures
Obtaining Approval to Conduct Internal Sales Activity o Units with expected internal sales revenues less than
$25,000 that do not charge federal grants o These units should use:
• Cost allocations
• Cost sharing
•
Historical salary adjustments
• Direct retros
•
Transfers
• or a Non-ISO account 500103 (Inter-departmental exchange)

Procedures
Obtaining Approval to Conduct Internal Sales Activity
(continued) o Recharge services must be managed through the use of a separate ChartField 2 code to track recharge service separately from external sales

Procedures
Obtaining Approval to Conduct Internal Sales Activity
(continued)
Training
• Training is required for all new recharge center managers.
• Training can be taken on-line.
• The Internal/External Sales department will provide direct training to an individual or department if online training is not a feasible format.

Procedures
Establishing an Internal Sales Accounting Model
Prepare an Internal Sales Vendor Authorization/Change Form
(UM 1679) if:
• A new internal sales accounting structure in PeopleSoft is needed
• A vendor code does not already exist in PeopleSoft

Procedures
Establishing an Internal Sales Accounting Model
• Whenever possible expenses should be recorded as such and not as a transfer in or out that doesn’t use the correct account code.
• The costs of internal sales need to be separated from the costs of external sales and all other funds.

Procedures
Establishing an Internal Sales Accounting Model
•
– Manual Payables Voucher
– Spreadsheet upload
– XML Interface

Procedures
Establishing an Internal Sales Accounting Model
•
– Timely - Within 60 days from the day the goods or service was provided.
– Clearly identifiable – The voucher must include the 5 Ws. The 5 Ws will be located in the comment section of a manual payables voucher or on the 258 character line description on spreadsheet uploads or XML interfaces

Procedures
Establishing an Internal Sales Accounting Model
•
– Accurate – The unit selling the goods or services must make every attempt possible for recording charges to the accurate chartfield string provided by the purchasing unit.
•

Procedures
Establish Internal Sales Rates o Billing rates should be reviewed annually and updated no less than every two years
• Units may update rate more often to avoid large fluctuations in the rates due to unexpected surpluses or deficits

Procedures
Reviewing Internal Sales Activity o Reviewing Internal Sales activity annually is a best practice business module

Procedures
Purchasing Internal Sales Capital Equipment and Recording Depreciation o Capital transactions should be recorded in the Internal Sale
Capital Purchase fund code 7201 o The cost of the capital purchase will be recovered over the useful life of the equipment through allowable depreciation o Depreciation is manually transferred from the unit's internal sales operating activity (fund 1150 or 1151) into the Internal
Sales Capital Purchase fund at least on an annual basis

Procedures
Purchasing Internal Sales Capital Equipment and Recording Depreciation o The Internal Sales Capital Purchase fund 7201 should use the same DeptID, Program and other ChartField codes that uniquely identify the internal sales activity in the internal sales operating fund (1150 or 1151)

Procedures
Purchasing Internal Sales Capital Equipment and Recording Depreciation : Policy Managing
University Capital Equipment o Use of the Internal Sale Capital Purchase fund is restricted to capital expenditures that relate to and benefit the internal sales activities o Internal Sales equipment will be purchased in the Internal
Sale Capital Purchase fund 7201 using account 850101 –
Capital Equipment Purchases

Procedures
Purchasing Internal Sales Capital Equipment and Recording Depreciation o The unit conducting internal sales activity will manually record the depreciation expense transfer to the Internal Sales
Capital Purchase fund 7201 from the internal sales operating fund (1150 or 1151) using transfer accounts 600310/610310
(ISO Depreciation Expense)

Procedures
Purchasing Internal Sales Capital Equipment and Recording Depreciation o Units may choose to subsidize the depreciation of the equipment
› Note: Additional transfers to the Internal Sale Capital Purchase fund
7201 from other current funds may be needed when subsidizing depreciation expense
› Contact the Internal/External Sales department for appropriate accounting treatment

Procedures
Purchasing Internal Sales Capital Equipment and Recording Depreciation o Capital Asset Sales & Salvage (Gains) due to disposal of the capital equipment should be recorded in the internal sales operating fund (1150 or 1151)

Definitions o Break-even Period
› Time period in which total revenues for a good/service equal total expenses
› Three –year average margin of + or – 15% is considered an acceptable range
› Annual variance within that range should be included in future rates
› Variance greater than 15% should be resolved with Internal Sales
Compliance Office

Definitions o Break-even Period
› Time period in which total revenues for a good/service equal total expenses
› Three –year average margin of + or – 15% is considered an acceptable range
› Annual variance within that range should be included in future rates
› Variance greater than 15% should be resolved with Internal Sales
Compliance Office

Roles & Responsibilities
Internal Sales Office
• Approve initial rates.
• Ensure ongoing compliance to University Policy and
Procedures.
• Perform compliance reviews of recharge centers and follow up on management action plan.

Roles & Responsibilities
Internal Sales Office
• Recommend and monitor resolution to the handling of variances > 15% threshold.
• Develop and update content in internal sales training materials.
• Update and document the Disclosure Statement as required by the Uniform Guidance.

Roles & Responsibilities
Internal Sales Business Manager
• Prepare business plans, rate development and analysis.
• Notify Inventory Services of equipment included in rates.
• Comply with established University policy and its related procedures
• Creation of management action plan and implementation.

Roles & Responsibilities
Chief Financial Manager
• Act on or disapprove internal sales activity prior to obtaining Internal Sales approval.
• Responsible for compliance of all University policy and federal regulations.
• Review internal sales revenues, expenses, rates and business plan to evaluate financial solvency.

Roles & Responsibilities
Chief Financial Manager
• Work with business manager to cover any deficits or disallowances.
• Review the internal sales compliance memo and management action plan.
• Provide resources as necessary.

Questions?