Revised: April 1998
The University of Wisconsin System institutions have established internal service departments which sell and/or provide services to other departments or institutions within the UW System. The institutions also sell and provide services to entities external to the UW System. Consistent methods of accounting for internal and external sales and services need to be established.
The policy and procedures set forth in this paper are based on nationally accepted accounting standards for higher education as outlined in NACUBO’s Manual for Accounting for College and University Business Administration and the AICPA Industry Audit Guide for Colleges and Universities.
A. Internal Sales and Services
An internal service department is defined as an entity which exists primarily to provide goods or services to other academic or administrative units of the institution (e.g., printing, central stores, duplicating centers, fleet operations, physical plant, etc.). Most of the activities of internal service departments are categorized as General Administration and Logistical Services included under Institutional Support (AC 1) of the Uniform Chart of Accounts.
Credits for interdepartmental transactions of internal service departments or storerooms which provide services to the institution should not be included as revenues but as offsets to expense in the servicing department. Internal sales credits shall be used to account for the receipt portion of interdepartmental transactions of internal service departments within the same institution or between institutions within the UW System.
B. External Sales and Services
Sales and services of an auxiliary enterprise (e.g., union, bookstore, residence hall, student center, conference center, etc.) to another department or auxiliary enterprise should be included as revenues of the auxiliary enterprise. Auxiliary enterprises are entities existing to furnish goods or services to students, faculty, or staff, charging fees directly related to, although not necessarily equal to, the cost of the goods or services. Only those activities coded to Auxiliary Enterprises (AC 8) in the Uniform Chart of Accounts should be included. Sales and services of auxiliary enterprises to another department or auxiliary enterprise shall be recorded as revenue to the auxiliary enterprise.
External sales credits shall be used to account for the sales and services to an individual or entity external to the UW System where the selling department is GPR funded. Sales and services of PR funded departments to individuals or entities external to the UW System shall be coded as revenue.
Receipts due to the return of materials previously recorded as an expenditure should be coded as a credit to the original disbursement class code. If the charge is to a current year GPO fund, the credit should also be to that fund. If the charge occurred in the prior year to a GPO fund, the credit should be to Fund 131.
The accounting for the cost of the services and materials obtained from the internal service departments should be the same as if the item had been obtained from sources outside the institution. The object class code which most closely describes the goods or service rendered should be used. Items purchased as inventory by Central Stores should be coded to merchandise for resale. There is, however, a distinction in the class codes for printing/duplicating purchased internally and externally.
Internal sales credits may only be used by the selling department if the sales/services are to a department within the same institution or between institutions within the UW System:
9050 Internal Sales Credits–General
9061 Internal Sales Credits–Heat
External sales credits may only be used by the selling department if the sales/services are to an individual or entity external to the UW System and the selling department is GPR funded.
9051 External Sales Credits–General
9060 External Sales Credits–Electricity
9062 External Sales Credits–Heat
Sales and services not falling within the above definitions should be coded to revenue class codes.