1. Internal Sales Policy and Procedure Updates

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

3. 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

4. Policy Selling Goods and Services to University Departments 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 (continued)

5. 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)

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

7. Procedures Obtaining Approval to Conduct Internal Sales Activity 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 on- line training is not a feasible format. () (continued)

8. Procedures Establishing an Internal Sales Accounting Model Internal Sales Vendor Authorization/Change Form 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

9. 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.

10. 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

11. 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

12. 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.

13. 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

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

15. Procedures Purchasing Internal Sales Capital Equipment and Recording Depreciation 7201 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 11501151 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

16. Procedures Purchasing Internal Sales Capital Equipment and Recording Depreciation 7201 11501151 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)

17. 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 7201850101 – o Internal Sales equipment will be purchased in the Internal Sale Capital Purchase fund 7201 using account 850101 – Capital Equipment Purchases

18. Procedures Purchasing Internal Sales Capital Equipment and Recording Depreciation 7201 11501151600310610310 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)

19. 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

20. Procedures Purchasing Internal Sales Capital Equipment and Recording Depreciation 11501151 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)

21. 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

22. 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

23. 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.

24. 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.

25. 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.

26. 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.

27. 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.

28. Questions? Office of Internal Sales website:http://finsys.umn.edu/sales/iso.html This presentation is posted on the site.