Internal Sales Policy and Procedure Updates

Internal Sales
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:
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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:
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•
•
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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
• Billing internal customers should be done
using the PeopleSoft Accounts Payable
module in the UMNIS SetID.
– Manual Payables Voucher
– Spreadsheet upload
– XML Interface
Procedures
Establishing an Internal Sales Accounting Model
• Charges must be:
– 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
• Charges must be:
– 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.
• Units that have Sponsored Projects should
retain purchasing documents as defined in the
University of Minnesota Records Retention
Schedule.
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?
Office of Internal Sales website:
http://finsys.umn.edu/sales/iso.html
This presentation is posted on the site.