Printed on: 07/16/2020. Please go to http://policy.umn.edu for the most current version of the Policy or related document.
University of Minnisota  Procedure

Internal Sales Office Review of Internal Sales Activity

Administrative Procedure

Introduction

The rate development, accounting and rate charging practices for internal sales activity must comply with OMB Uniform Guidance CFR number 2 CFR 200 regulations and the rates should fully cover, but not exceed, costs.

The Internal Sales Office reviews rates on a periodic basis determined by the risk profile and frequency defined below. The review process includes an engagement letter which outlines the role and responsibilities of the Internal Sales Office and the recharge center, the documentation necessary and the activity under review. The process also includes a final report that summarizes the review and findings.

Internal Sales review process:

  1. Determine when a review is necessary.

    The Internal Sales Office reviews the internal sales activity based on the risk profile outlined in the chart below. The risk profile is based on the following criteria; revenue recognized on an annual basis, charging sponsored projects and the type of recharge center. Auxiliary Services, Facilities Management and other University Wide Recharge Centers fall into the no applicable risk (Minimal Risk) category if they are not charging sponsored projects, and will not be reviewed by the Internal Sales Office. See the detailed list below.

    Risk Profile
    Issue Minimal Risk Low Risk Medium Risk High Risk
    Internal Sales Revenue Varies $25K - $100K $101- $500K $501K and higher
    Charges Sponsored Projects No Yes Yes Yes
    Assigned Resource Responsibility Center (RRC) Codes
    Dept. #Department DescriptionRRC Code
    10251 CPPM Project Delivery CPPMX
    10290 FM U Construction FMXXX
    10294 FM Abatement of Haz Material FMXXX
    10297 FM Matl & Shops - Sign FMXXX
    10300 FM Energy Management FMXXX
    10302 FM Steam Operations FMXXX
    10303 FM Electricity Operations FMXXX
    10304 FM Water and Sewer Operations FMXXX
    10305 FM Gas Operations FMXXX
    10306 FM Chilled Water Operations FMXXX
    10307 FM Facilities Engineering FMXXX
    10310 UHS Emergency Management PUBSF
    10503 UMD Stores Administration UMDXX
    10621 M Facilities Management Admin UMMXX
    10649 M Bookstore UMMXX
    11151 FM Research Blg Services FMXXX
    11619 St. Paul Bookstore AUXSV
    11620 Crookston Bookstore UMCXX
    11635 U Card Office  AUXSV
    12055 FM Building Controls FMXXX
    12131 FM Design FMXXX
    12149 FM Low Voltage FMXXX
    12151 U Market Services Logistics AUXSV
    12172 FM Locksmiths FMXXX
    12173 FM Technical Services FMXXX
    12210 FM Stormwater FMXXX
  2. Determine frequency of reviews.

    The frequency of the Internal Sales Office review is based on the risk profile. The frequency of the reviews may be more frequent based on severity of the recharge center’s prior reviews compliance issues, Internal Audit Plan or by request from the unit.

    Review Frequency
    FrequencyMinimal RiskLow RiskMedium RiskHigh Risk
    (# of Years) No Review required 5 to 8 3 to 5 2 to 4
  3. Process of the review

    Engagement Letter

    The Internal Sales Analyst sends an Engagement Letter to the recharge center. The letter includes the activity being reviewed, the review period, the objective of the review, the process and what documents are necessary for the review.

    Review

    The Internal Sales Analysts  reviews the rate development and associated financial documents that are received from the recharge center. The Internal Sales Analyst meets with the recharge center unit to discuss process, answer any questions and ask any questions about the activity to gain a clearer understanding of the activity.

    The Internal Sales Analyst completes the checklist. This is a quantitative summary of activity being reviewed. This form is the basis to determine the narrative associated with the compliance memo.

    Compliance memo

    The Internal Sales Analyst drafts the compliance memo. This memo includes the activity and the area reviewed. A summary and range of findings, the policy/procedure included in the review, and the resolution to satisfy the finding.

    The preliminary compliance memo and checklist are sent to the recharge center for review and understanding of the identified findings. The Internal Sales Analyst will work with the recharge center to develop a Management Action Plan (MAP) which defines the process/actions necessary to resolve the findings. The MAP should include the responsible person and a due date when action will be complete. The MAP will be included in the final compliance memo.

    A final draft of the compliance memo and the checklist are sent to the significant parties involved in the Internal Sales activity.

  4. Follow-up

    The Internal Sales Analyst will work with the recharge center to complete the Management Action Plan.

    • Findings for Consideration should be adopted as best business practices to avoid findings in the future.    
    • Next Rate Development findings must be corrected during next budget cycle.
    • Immediate Findings must be corrected within three months of date of final memo.

  5. Results of the reviews

    Internal Sales reviews serve several purposes and are designed to result in greater awareness of policies, procedures and best business practices. The review is also designed to highlight opportunities that will enhance compliance, efficiencies related to rate development, overall management and monitoring of the internal sales activity.

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