University of Minnesota
Controller's Office
http://controller.umn.edu/
612-624-1617 or controller@umn.edu

Internal Sales

The Internal Sales compliance office facilitates the review of, and gives approval for, all internal sales to other departments. The office works with the units to ensure:

  • consistent cost estimating,
  • accumulating costs in order to have reliable cost estimates,
  • improve cost control,
  • enhance accountability,
  • costs incurred for the same purpose in like circumstances are treated consistently,
  • to accurately accumulate all allowable and allocable costs within an identified segregated set of accounts,
  • to recognize subsidies to the operation,
  • to provide a means to operating within federal guidelines, and
  • to establish rates based on total costs.

University colleges and departments are encouraged to utilize academic expertise and institutional resources on an ongoing basis that are unique, convenient, or are not readily available from external resources to other internal customers.

Steps to obtain approval to conduct internal sales activity

Is your activity an internal sale? (step 1)

  • Does it meet the following criteria?
  • Provide a specific ongoing good or service to other units or projects, and recover the costs by charging the users on a "rate basis."
  • Develop their rates to consistently and equitably recover the costs of the service.
  • Rates are reviewed annually to operate on a breakeven basis.
  • Customers are other university colleges or departments.
  • Annual internal sales revenue greater than $25,000.
  • Charging a federal grant of any dollar amount.

The following units would not be classified as internal sales activity:

  • Parking or housing services, that primarily serve individuals and whose revenues are recorded as income to the University (these are auxiliary services).
  • Provide a one-time distribution of an expense rather than an on-going activity.
  • Annual internal sales less than $25,000 that do not charge federal grants. (These units should use cost allocations, cost sharing or transfers.)

Policy

Procedures

Presentations

Forms

Job Aids

Training

The internal sales training modules are required every two years for RRC managers and anyone in the department involved with the internal sales activity. Each module takes about 30 minutes. After completion of each module the "personal training records" of the individual will be updated to show the course has been completed. These courses are in the ULearn system.

  • Course1 Overview of Policy Governing Internal Sales
  • Course2 Transacting Internal Sales and Rate Development Basics
  • Course 3 Rate Development Example

Internal sales approval and implementation checklist

Step 1 - Verify that the activity is an internal sale. See "Is your activity an internal sale?" information above.

Step 2 - Complete the Internal/External Sale Approval form and send to extsales@umn.edu for review. See Administrative Procedure: Obtaining Approval to Conduct Internal Sales Activity.

Step 3 - Complete the Internal/External Business Proposal Outline and sent to extsales@umn.edu for review. See Administrative Procedure: Obtaining Approval to Conduct Internal Sales Activity.

Step 4 - Complete a Rate Development Template and sent to extsales@umn.edu for review. See Administrative Procedure: Establishing Internal Sales Rates.

Step 5 - After the Internal Sales Compliance Office has completed review, obtain administrative approvals.

Step 6 - Establish an accounting structure. See Administrative Procedure: Establishing an Internal Sales Accounting Structure.

Step 7 - Complete activity and invoice.

Want a printable version of the checklist? Click here.

Most Common Audit Findings and Recommendations

  • Failing to base rates on actual required resources and\or usage.
  • Failing to charge all internal customers the same rate.
  • Rate calculations and/or actual costs include unallowable costs.
  • Transfers out (other than depreciation) recorded without adequate documentation.
  • Conducting activity with excessive operating margins creating a surplus or deficit.
  • Unsupported combination of external sales with internal sales for cost or revenue.

Other questions frequently asked

How do I "pay" Campus Club?

Campus Club customers should enter a manual journal entry into the General Ledger. Use this account string for the Campus Club side of the transaction: Fund 9000, DeptID 12065, Program 21383, Account code 520601. Campus Club asks that departments also fax a copy of the journal entry to the Campus Club.

If I am not an ISO, can I do a Journal Voucher in the AP system to charge another department for goods or services that our department sold to them?

No. You have to be an ISO in order to do the Journal Voucher in the AP system to charge a department for goods or services sold to them. Contact the Helpline to assign a ticket to the ISO group for them to determine if your department should be an ISO.