Establishing a Sales Accounting Structure

NOTE: This procedure provides guidelines be to followed with Administrative Policy: Selling Goods and Services to University Departments and Administrative Policy: Selling Goods and Services to External Customers.

Introduction

The costs of internal sales need to be separated from the costs of external sales. Combining of costs could lead to misinterpretation of fund balance by federal auditors resulting in the unit conducting internal sales activity having to refund profits on external sales to the federal government. Any department, college, or administrative unit desiring to sell goods or services must obtain appropriate approval and follow all policies and procedures. See link to Administrative Policy: Selling Goods and Services to External Customers or Administrative Policy: Selling Goods and Services to University Departments.

NOTE:

• The separate internal and external sales accounting structures should contain only those operating resources directly related to the provision of goods or services to their respective customers.
• Sales revenues and expenses 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 expenses. Revenue should be coded as such and NOT as a reduction of expense.
• Sales to University departments are NOT subject to sales tax even if the funding comes from an external source.
• Sales to non-University customers may be subject to sales tax and/or Unrelated Business Income Tax (UBIT).
• A non-sponsored guarantee account for use in the event of a deficit resulting from sales activity must be designated outside of the sales accounting structure but within the RRC.

Establishing Chart of Accounts Structure in PeopleSoft

1. Establish a chart of accounts structure for the activity:

   NOTE: Sales must be uniquely identified in the University financial system.

2. Determine the correct account code for each type of revenue and expense that has been estimated.
3. Determine budget amounts for the activity. Include annual sales revenue and all expenses required to generate the revenue.

If a new program value is required to record the sales activity, a new budget expense line will be required. Departments should contact the Budget Office prior to setting up the new budget expense line.