Establishing an Internal Sales Accounting Model
The costs of internal sales need to be separated from the costs of external sales and all other funds. Combining of costs of internal sales with costs of external sales could lead to misinterpretation of fund balance by auditors resulting in the recharge center activity having to refund profits on external sales to the sponsor. Any department, college, or administrative unit desiring to sell goods or services to external customers must obtain appropriate approval and follow all policy and procedures defined for selling to external customers. See Administrative Policy: Selling Goods and Services to External Customers.
- The separate internal sales accounting structure should contain only those operating resources directly related to the provision of goods/ services to internal customers. Funds in these accounts cannot be expended for non-internal sales activities (for example, teaching or research).
- Internal sales revenues and expenditures should be recorded in appropriate accounts. That is, the accounts should be used in a manner that will result in a matching of revenues with expenditures. Revenue should be coded as such and not as a reduction of expenditure. Whenever possible expenses should be recorded as such and not as a transfer in or out that doesn’t use the correct account code.
- Sales to University departments are not subject to sales tax even if the funding comes from an external source.
Establishing Chart of Accounts Structure in PeopleSoft
- Establish a chart of accounts structure for the activity:
If a new internal sales accounting structure in PeopleSoft is needed, prepare a Internal Sales Vendor Authorization/Change form UM 1793 if a vendor code does not already exist in PeopleSoft. Submit the completed form to Internal Sales Office.
NOTE: Internal sales must be uniquely identified in the University financial system.
- Determine the correct account values for each type of revenue and, expense that has been estimated.
A new budget expense line may be required to record the internal sales activity in its own ChartField 2 code.
Billing Internal Customers
- Billing internal customers should be done using the PeopleSoft Accounts Payable module in the UMNIS SetID. Methods of billing through the PeopleSoft Accounts Payable module include:
- Manual Payables Voucher
- Spreadsheet upload
- XML Interface
- Regardless of the method used to bill an internal sales customer, the charges must be:
- Timely - Within 60 days from the day the goods or service was provided. See Administrative Policy: Processing Accounting Transactions
- 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. See Justification Standards Job Aid for required information.
- 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.