Stores 

• What is a Store?

  An operating unit providing services, or products to users principally within the University for a fee.

  • Specialized Service Facilities - Highly complex or specialized facility
  • Major Store - All store operations that have total annual expenditures of $500,000 or more.
  • Minor Store - All store operations that have total annual expenditures of $50,000 or more but less than $500,000
  • Recharge Funds - All store operations with annual expenditures less than $50,000 and are not subject to the Stores policy as they should normally constitute a pass-through of direct costs only.

   

• Federal Regulations

  Store Activities can result in charges, directly or indirectly, to federal grants and contracts as Oklahoma State University.

   

  Because the University receives federal funds, it must comply with the following:

  • Uniform Guidance
  • Cost Accounting Standards
    • CAS Standards 501, 502, 505, 506
      • Consistency in estimating, accumulating  and reporting costs
      • Consistency in allocating costs incurred for the same purpose
      • Treatment of unallowable costs
      • The cost accounting period
  • Subsequent Regulatory or Statutory Requirements - Audit Findings
• Who are the Store users?
  • Internal Users - Existing under the university umbrella including academic, research, administrative and auxiliary areas which purchase services to support their work at OSU. This includes all state agencies that report to the Board of Regents for Oklahoma State University and A&M Colleges. In addition, the OSU Research Found, Inc. and the OSU Foundation are considered internal users.

   

  • External Users - Organization or individuals that do not report to the Board of Regents. Also includes any members of faculty, staff or students acting in a personal capacity.
• Responsible Parties

  Dean and Other Administrative Head

  • Review and approve the establishment of each new store prior to a new store fund being requested
  • Review and approve all major store rates within his/her unit with the advice and consent of Tax & Compliance Services
  • Review and approve all minor store rates within his/her unit unless the Administrative Head chooses to delegate responsibility
  • Review and approve all special requests for mid-year rate adjustment with the advice and consent of Tax & Compliance Services
  • Review the performance of major stores with respect to breakeven at fiscal year end

   

  Store Manager

  • Ensure a schedule of rates for major stores is prepared and submitted tot he Administrative Head for review and approval by the established deadline
  • Ensure a schedule of rates for minor stores (as defined above) is prepared and submitted for approval by the established deadline.
  • Ensure the store's financial results with respect to "breakeven" are reviewed at year-end and future rates are adjusted for over-recoveries or under-recoveries
  • Ensure that the approved rate schedule is applied in accordance with CAS to all users
  • Ensure the store equipment is reconciled with Property Management's inventory listing as required by institutional policy
  • Ensure depreciation is incorporated properly
  • Ensure billings are timely and receivables are controlled and reconciled

   

  Tax & Compliance Services

  • Approve formation of new stores
  • Assist store managers with policy and procedural matters
  • Perform annual review of major store rates prior to Dean approval
  • Review performance of major stores with respect to breakeven
  • Review special requests for mid-year adjustments

   

• Recovery Requirements

  Nondiscriminatory Rates

  • All internal users will be charged at the same rate for the same level of services or products purchased in the same circumstances

   

  Billing Period

  • Services should not be billed until the service has been rendered
  • Must follow the university fiscal year of July 1 through June 30

   

  Breakeven Concept

  • No significant profit or loss as a result of charging users for the services provided in any particular period
  • Operating surplus or deficit within 10% of breakeven must be factored into the following years rate calculation
  • Fund balance in the operating account less working capital is used to determine the surplus or deficit

   

  Working Capital

  • Funds that are accumulated in excess of actual cost in order to fund future operating expenditures
  • Good business practices require working capital to manage cash flow
  • Oklahoma State University has established that a store's working capital should not exceed 60 days
  • Working capital is equivalent to 2 months of budgeted expenses

   

  Unallowable Costs

  • May not be included in the rate calculation
  • Refer to Unallowable Costs section of the Tax & Compliance Services website for additional unallowable information

   

• Establishing Store Funds

  Refer to Section 6.01 (Request for Establishing) for an outline of the information needed to request a new store fund.

   

  Requests to establish a new store and/or new store fund should be approved by Tax & Compliance Services.

   

  Stores will be assigned a Ledger 2 fund to be used solely for store operations

  • All revenues and expenses from operations are assigned tot eh Ledger 2 fund

   

  Each Store will be assigned a Ledger 7 fund and equipment custodian number

  • Used to record depreciation credit
  • Used to purchase capital assets for the store
  • Should not contain any operating expenses
  • ALL store equipment should be purchased from the Ledger 7 fund to ensure proper identification

   

• Components of Store Rates (Budgets)

  All allowable costs of a store will be used in establishing user rates and will be budgeted in and expended through on operating fund (Ledger 2).

   

  The budget will be determined by using the standard guidelines established by university policy and procedures and the Cost Accounting Standard guideline.

   

  Generally Include:

  • Salaries, Wages and Fringe Benefits
    • Base salary and fringe benefits of employees working in the store
      • Administrative Staff - Based on percentage of effort applied to store activity versus other OSU activities
      • Must be direct involvement
      • Must be supported by position questionnaire
  • Supplies and Materials
    • Supplies and materials necessary for the operation of the store
    • Office supplies if used solely for the operation of the store
    • Make sure that all supplies and materials are clearly identifiable to the store
    • Avoid over-accumulation of inventory
  • Other Costs
    • Travel
    • Rental and service contracts
    • Special conferences related specifically to the store
    • Professional services
    • Communications
  • Repairs and Maintenance
  • Equipment Depreciation
    • Capital equipment - Value equal to $5,000 and greater with useful life of more than two years
    • Purchase cost should be charged to the Ledger 7 fund
    • Depreciation expense should be captured through the store rate
    • Depreciation is calculated using the straight-line method by Asset Management and is based on the cost of the asset, less the estimated salvage value (if any), over the useful life of the asset
    • Major stores should also include depreciation on buildings and non-structural improvements in the store rate
  • Utility Costs
  • Carryforward surpluses or deficits

   

   

• Rate Development

  Define Good or Services to Sell

  • Motor Pool - Vehicle Rentals
  • Tick Rearing - Ticks
  • Microbiology - Slides

   

  Determine Customers

  • Internal
  • External
  • Need to estimate number of customers

   

  Store Rate

  • Cost per unit of output to recover expenses
  • Budgeted Expenses +/- Prior Over/Under Recoveries (within +/- 10%)/Budgeted Level of Activity(Usage Base)

   

  Usage Rate - Volume of work expected to be performed as expressed in units

  • Labor hours
  • Machine hours
  • CPU time

   

  Developing an Hourly Rate

  • When charging on an hourly basis, the total maximum hours available for a full time employee is 2,080 per year. This would be the starting point and adjusted downward for vacation, sick leave, etc.

   

• Billing Procedures

  Internal Billing via Campus Vendor Invoice (CVI)

  • Must be able to "stand along"
  • Uninformed person should be able to determine the following:
    • Purpose of the charge
    • How many units
    • Amount charged per unit

   

  External Billing via Invoice

  • External customer must be asked if service is available through the private sector
  • Done to ensure the university is not in competition with the private sector (tax implications).
  • Charged full direct costs of the store operation
  • Never charged less than the federal government and internal users

   

• Potential Pitfalls

  Inadequate Rate Document

  • Results from user rates being set arbitrarily without regard to the actual costs of providing the goods or services
  • User rates must be supported by cost calculations based on historical costs and service levels
  • An adjustment for known or anticipated changes in service levels or services should be clearly documented
  • Estimated rates may only be used in the first year of operation

   

  Failure to Maintain Current Equipment Depreciation Schedules

   

  Failing to Separately Identity Expenses Included in the User Rate from Department Expenses

  • If you can't demonstrate that the cost was incurred, you can't include it in the user rate
  • Also if you include costs in the user rates, you must be able to show that they were paid by the store and not included in one of the universities indirect cost pools or from other federal funds

   

  Failing to Document Clearly the Goods/Services Provided

  • User bills that do not carry sufficient detail to identify the service provided are subject to disallowance
  • It is very important that the customer gets a detailed bill for services provided

   

• Helpful Information

  March 1 is the deadline for Major Stores to submit rate schedule to Tax & Compliance Servies for review

   

  Policy and Procedure 4-0140 (Stores)