Reviewing Internal Sales Activity Annually

Introduction

A review of internal sales activity and recalculation of the internal sales rate is required annually after the close of the previous fiscal year. The preceding year's financial information will provide the basis for developing the following year's rate.

Internal Sales Business Managers should monitor internal sales activity throughout the year to assure a significant surplus or deficit will not exist at year-end. If a significant surplus or deficit is projected, work with the Internal Sales Compliance Office to determine if the rate should be adjusted within the same fiscal year.

How to review internal sales activity:

1. Review the Internal Sales Business Plan.

   The department or college that sponsored the internal sales activity is responsible for reviewing the Internal Sales Business Plan on an annual basis.

   The review of the business plan should consider, but not be limited to, the following questions:

   • Does the unit conducting internal sales activity continue to qualify to conduct internal sales activity? As a recharge service? As a specialized service?
   • Does the internal sales activity continue to provide a service that cannot be met elsewhere?
   • If this service can be provided more cost effectively elsewhere, what is the rationale for sustaining the internal sales activity?
   • Should the internal sales activity be discontinued?

2. Budget to Actual analysis

   Compare budgeted revenues and expenditures to the current year-end results on a line-by-line basis. Identify large variances and analyze reason for variance. Depreciable life verses remaining useful life of capital assets should also be analyzed.

3. Determine the surplus or deficit:

   Total revenue and subsidies less total expenses equals the surplus or deficit.

4. Determine adjustments to be made to following year's rate:

   All reasonable surplus or deficits from prior year must be incorporated in the calculation of the proceeding year's rate development. Any excessive surplus may require refunding the customers. Any excessive deficit may require a subsidy from the college or department. Please contact Internal Sales Compliance Office for assistance in determining the appropriate handling of excessive surpluses or deficits.

   Calculate the adjusted rate using the steps described in Administrative Procedure: Establishing Internal Sales Rates. Use the preceding fiscal year's financial data to estimate expenses and revenues.

5. Submit the new rate proposal along with proof of annual review to the Internal Sales Compliance Office

   Each year the annual business plan review and budget to actual comparison for the fiscal year just ended must be submitted to the Internal Sales Compliance Office by September 30.

   In addition, each year the new rate proposal for the forthcoming fiscal year must be submitted to the Internal Sales Compliance Office by the RRC in compliance with the annual budget process.

6. Submit Internal Sales budget information to Budget Office

   In accordance with the annual budget instructions, units conducting internal sales activity must submit their budget information to the Budget Office.

7. Implement the new rate.

   Customers are to be charged the new rate, which will be published on the internal website, at the beginning of the fiscal year.