What is an Internal Service Center (ISC)? An Internal Service Center, as defined in the Federal Uniform Guidance Part 200.468, must comply with the Federal Register Uniform Guidance. Services are those provided by either complex or specialized facilities that are operated by UCCS.
What is the Internal Sales Activity Rate (ISA)? Internal sales activities (ISAs) are required to calculate the actual cost of providing services at least biennially. Rate calculations must capture all of the expected costs of operating the ISA, even if some of the costs will be subsidized by the department itself. The allocation of total recoverable costs should be assigned to projected sales units in a reasonable and consistent manner. ISAs offering more than one product or service should complete a separate rate calculation for each product or service.
What factors are considered in developing an ISA rate?
- Charges for the services must be charged directly and must be calculated based on an established rate or methodology.
- Rates must be non-discriminatory against federally supported activities of UCCS.
- Rates should be reviewed at least every two years and should be developed with basis of recovering aggregate costs for the services provided.
- Unallowable costs must be excluded. For additional information on expenses that are unallowable, refer to OMB Uniform Guidance subpart E, subtitle VI for a complete list.
|Examples of Unallowable Cost|
How is the Internal Sales Activity Rate calculated? The rate is calculated as a cost-based rate. For internal customers, this rate is calculated on a break-even basis meaning that the rate is developed solely to recoup the expense to provide the goods or service and no profit is gained. To calculate an internal sales activity rate:
|ISA Rate =||Total annual cost for providing the goods or services+ or - (Plus prior year under-recover or minus prior year over-recovery) - Minus any departmental subsidy|
|Divide by: Projected volume of work in a year for activity(ex: anticipated total units produced, machine hrs, labor hrs, etc.)|
What is the difference between Internal vs. External Customers? Internal customers include those within the university as well as federally-sponsored projects. These customers use university speedtypes. Internal customers must all be charged at the same rate and must be non-discriminatory towards federally-sponsored projects. The rate charged to internal customers must be calculated based on a break-even methodology, meaning that the rate should be developed to recoup costs for the products or services rendered. External customers, such as students and Fund 80 speedtypes, may have higher rates than those used for internal costs. Note that external customers may be subject to sales tax.
When should billing occur? Products or services should be billed within 30 days. Billing may not occur prior to services being rendered, as a result advanced billing cannot be provided. If the service is being provided on an on-going basis, interim billing is highly encourage but not required.
|Steps to Obtain Approval for Internal Sales Activity Rate|
1. Determine if your activity is an internal sale. Questions to consider when making this determination include the following:
2. Determine measurable units for products or services you would like to sell. Ex: Labor hours, machine hours, per unit, etc.
3. Complete the Internal Sales Activity Rate calculation sheet.
4. Send an electronic copy via email to firstname.lastname@example.org as well as a signed hard copy to Nicholas Martinez, campus box MH1 Accounting.
5. Establish an accounting structure.
6. Notify the Budget & Planning Office of the anticipated annual revenue as it will need budgeted separately from the unit/departments activities.
7. Resubmit a new Internal Sales Activity Rate calculation every two years.
Where should revenue be recorded?
- IN revenue should be recorded in an account within the range of 380100-389999.
- ID revenue should be recorded in an account within the range of 390000-399999.
- Revenue from external sales should be recorded in SSEA, range of 250000-259999 or Miscellaneous Revenue (if in a Fund 28 or 29), range 325000-333500.
If you are unsure what account the revenue should be recorded, contact the Controller's Office for assistance. Also, you can use the following chart as a guide on what revenue account to use:
How long are records retained for? Documentation for annual rate calculation as well as records for goods and services sold to customers should be maintained for a minimum of three years plus the current fiscal year.
|*Fund 30 Exception*|
|If a sale was made to a Fund 30, then the documentation must be retained by the project for 6 years following the termination of grant contract.|
Uniform Guidance (Effective 12/26/14): https://federalregister.gov/a/2013-30465
Educational Crosswalk between OMB A-21 and Uniform Guidance: http://www2.ed.gov/policy/fund/guid/uniform-guidance/crosswalkedinstitutions.doc
UCCS Records Retention: http://www.cu.edu/ope/aps/2006
Last Reviewed on 10/18/2017