1. Fiscal Year-End Activities for Internal/External Sales

2. Learning Objectives
Year-End Review process
Rate Assessment

3. Year-End Review
Reviewing Internal/External Sales activity annually is a best business practice and should be completed by all units.
Activities to consider:
Invoicing
Depreciation expense
Unallowable costs
Expense allocation
Planned subsidies
Transfers
Variances

4. Invoicing
Invoice and record revenue for all completed Internal sales activity
Review External Sales contracts and bill accordingly
Validate entries posted – Exceptions and Budgets Errors
Monthly billing is best business practice
*Refer to Fiscal Year End Calendar for cut-off date

5. Depreciation
Record journal entries for the accumulated depreciation for all equipment recovered in the sales rates through June month end
Journal entries:
Record depreciation expense in the operating fund if recovered in the rates
Reduce the deficit balance in the plant fund
Subsidize operating fund if appropriate
Net Book Value at year end = Balance in plant fund 7201
Depreciation expense is recovered in the sales rates

6. Unallowable Expenses
Identify and remove any unallowable cost incurred in operating fund
If necessary, correct the accounting.
According to federal regulations (OMB Uniform Guidance), certain operating costs are specifically unallowable, such as bad debts, entertainment costs, and fines.

7. Expenses Allocation
Record journal entries/retros for expenses incurred (salaries, materials, supplies, repairs, maintenance, non-capital equipment and/or other)
Internal Sales activity should be allocated to fund 1150
External Sales activity should be allocated to fund 1026
Allocated to CF2 for activity
Expenses should be adjusted by Chart of Accounts expense code and not summarized in a transfer code

8. Planned Subsidies
Fund all subsidies originally planned in the rate development and budget.
Examples include:
Dollar amount (specific or shortfall)

9. Transfers
Depreciation is the only allowable transfer out on Internal Sales funds account code # – NMTO – Equip Replace
Recording of subsidies is the only allowable transfer in on Internal Sales funds # – NMTI – ISO Subsidy
Any other transfers should be corrected
Expenses should be adjusted by Chart of Accounts expense code

10. Variances
Fund reconciled deficits that will not be included in the next year’s rates
If there is a surplus greater than 15% of revenue, contact the Internal Sales Office for options on resolution
If there is a deficit greater than 15% of revenue, contact the Internal Sales Office for options on resolution

11. Rate Review
Reviewing Internal Sales rates annually is a best practice business model.
Activities to consider:
Timing
Review of Business Plan

12. Timing Monitor internal sales activity throughout the year
Identify potential significant surplus or deficit
Work with the Internal Sales Office to determine best course of action
Rate review should be performed at the close of the fiscal year
The preceding year's financial information will provide the basis for developing the following year's rate

13. Review of Business Plan
Continue to qualify to conduct internal sales activity?
Annual internal sales revenue greater than $25,000
Charging a federal grant of any dollar amount
Provide the services that are identified on the original business plan?
Provide a service that cannot be met elsewhere?
Why should the internal sales activity be continued?

14. Resources Fiscal Year End Activities
Capital Asset/Depreciation Reconciliation Process
Reconciliation of Surplus or Deficit Balance
Journal Entries that Internal Sales units can make through the General Ledger