Internal Trading. University of Edinburgh policy on how trading of goods and services between schools or support services should be transacted.

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1 Purpose of Policy Overview Scope: Mandatory Policy University of Edinburgh policy on how trading of goods and services between schools or support services should be transacted. Guidance on what constitutes internal trading, matters for consideration including the costing and pricing of services, service level to be provided, use of cost centre, account code and job code, recording transactions and use of eits and the use of resources generated by internal trading. All staff that are involved with trading internally with other schools or support service departments. Contact Officer Name: Role: Laura Robertson Financial Accountant Please cc Copy Financial Information, Reporting & Strategy Team (FIRST) 1

2 1. Scope Within the University, Schools and other units undertake a wide range of activities that may be considered to amount to trading internally with other Schools or units. A number of units are set up explicitly to provide internal services to other units. Some varied examples include: Information Services' provision of IT related services; Printing Services; Estates & Buildings Maintenance and Utilities. However, adhoc provision of goods and services between Schools or support service departments, for which charges are raised, equally come under the general heading of internal trading. Instances where a specific salary or non-pay expenditure item or part of an item is simply being transferred between departments would not be treated as internal trading however. This Guidance is intended to address the routine, day to day, internal trading prevalent across the University. There are, however, a small number of exceptions that have emerged in recent times (such as the "Roslin Institute" model, or the "Business School" model), which in some respects are considered "ring-fenced" activities, and where specific arrangements have been identified for the charging of services. These specific arrangements are not addressed in this guidance. For trading with external third parties, please see the Guidance on Commercial Activities. For matters relating to subsidiary companies, please see the Guidance on Subsidiary Companies. 2. Internal Trading Considerations The range and extent of internal trading within the University has grown over a long period of time, and various approaches to custom and practice have evolved. Because of this, it is not appropriate to attempt to set out a one-size-fits-all, prescriptive, approach as regards how aspects of internal trading could, or should, be carried out. Operational issues that need to be considered, however, include the following: The costing and pricing of services; Service levels to be provided; The use of a cost centre / account code / job code to capture the financial activity of a service unit. On a more general level, financial management issues to consider include: The recording of transactions and the use of electronic Internal Transfers (eits); The use of account codes to describe transactions; The use of resources generated by internal trading. 2

3 3. Cost & Price of Services 4. Service Levels to be Provided 5. Use of Cost Centre / Job Code 6. Recording of transactions & use of eits The costing and pricing of services should, where possible, have regard to the actual and full costs of delivering the service in question. Where relevant, costs should include an amount that recognises the need to replace equipment at intervals and any other indirect costs. For advice on full economic costing, please see college / support group finance team. Where relevant, the quality of service to be delivered may need to be explicit (i.e. is the unit delivering a "standard" level of service, or an "enhanced" level of service?). The details of this will be matter for the units concerned to agree at the outset. An activity providing services must have its own cost centre, in order to facilitate identification of the transactions associated with the activity, both in terms of its costs and its income. Proposals for new cost centres should be referred to the college / support group finance team. All transactions will be recorded via electronic Internal Transfers (EITs) link. This will help ensure that unit records, as reflected in the University's ledger, will be as up to date as possible. To that end, authorisation of transactions should be a priority for the receiving unit, with queries pursued immediately. 3

4 7. Use of Account Codes It is important that the account codes to be used for recording internal transactions are the most appropriate ones, both from the point of view of the units concerned, but also from the point of view of the University ledger overall, from which statutory accounts and other analyses must be produced. Instances where a specific salary or non-pay expenditure item or part of an item is simply being transferred between departments would not be treated as internal trading and would be transferred on the specific account code of the original expenditure. All internal trading should be both charged and credited using the same internal recharge account codes selected from the table below. Account No. Account Name 4000 BOND FUND INTNL DISTBN 4001 INT RECHARGE : PRINTING 4002 INT RECHARGE : STATIONERY 4003 INT RECHARGE : PHOTOCOPYING 4004 INT RECHARGE : TRAVEL EXPENSES 4005 INT RECHARGE : TFR OF GOODS 4006 INT RECHARGE : GENERAL 4007 INT RECHARGE : COURSE FEES 4008 INT RECHARGE : HIRE OF EQUIP 4009 INT RECHARGE : ROOM HIRE 4010 INT RECHARGE : SUPPLY OF STAFF 4012 INT RECHARGE : AVS TRANSPORT 4015 INT RECHARGE : EQUIP MAINTENCE 4016 INT RECHARGE : COMP HARDWARE 4017 INT RECHARGE : COMP SOFTWARE 4018 INT RECHARGE : HEALTH SCREEN'G 4020 INT RECHARGE : COMP SOFTWARE 4021 INT RECHARGE : COMP TELECOMM 4022 INT RECHARGE : AUD-VISUAL AIDS 4023 INT RECHARGE : SUNDRIES 4024 INT RECHARGE : CONSULT PAYMNT 4025 INT RECHARGE : ENG DEVELOPMENT 4026 INT RECHARGE : CONSUMABLES 4027 INT RECHARGE : DOCUMENTATION 4028 INT RECHARGE : S/WARE LICENSE 4029 INT RECHARGE : S/WARE MANUALS 4030 INT RECHARGE :COMP REPAIR/MAIN 4031 INT RECHARGE : MATERIALS 4032 INT RECHARGE : COMP DISKS/TAPE 4033 INT RECHARGE :DATA PREPARATION 4034 INT RECHARGE : COMPUTER TIME 4035 INT RECHARGE : USE OF LICENCES 4036 INT RECHARGE : NETWORK MAINTEN 4037 INT RECHARGE : NETWORK SERVICE 4038 INT RECHARGE :NETWORK PRINTERS 4039 INT RECHARGE:SERVICE PROVISION 4

5 4040 INT INCOME-BOND FUNDED EXPEND 4041 INT RECH ANIMAL-MICE 4043 INT RECH-SPF BUMSTEAD 4044 INT RECH ANIMAL-PATHOLOGY 4045 INT RECH ANIMAL-ARKGENOM 4046 INT RECH ANIMAL-POULTRY 4047 INT RECH ANIMAL-FLOW CYTOMETRY 4049 INT RECH ANIMAL-BIOIMAGING 4050 STUDENT ACCOM SERVICE (INC) 4051 POLLOCK HALLS/STUD HOUSES INC 4052 EDINBURGH UNI COMP SERVICE 4053 ALL OTHER S 4054 WK DIV DIRECT LABOUR WORK DONE 4055 WORKS DIVISION MATERIALS 4057 WORK C/D OUT BY GROUND STAFF 4059 INT RECH ANIMAL-DRYDEN 4060 INT RECHARGE : WASTE-FRIDGES 4061 INT RECHARGE : WASTE-CLINICAL 4062 INT RECHARGE : WASTE-RADIOACTV 4064 INT RECHARGE : WASTE-CONFIDENT 4065 INT RECHARGE : WASTE-HAZARDOUS 4066 INT RECHARGE : WASTE-RECYCLING 4067 INT RECHARGE : ELECTRICITY 4068 INT RECHARGE : HEATING 4069 INT RECHARGE : WATER SERVICE 4071 INT RECHARGE : GAS 4072 INT RECH-PROTEOMICS 4099 INT RECHARGE : MRF/SRF Recharges to research grants are an exception. These should be charged to the appropriate research grant budget 3XXX expense account code. 8. Use of Resources generated by Internal Trading Resources accumulated by service-providing units are subject to the same rules for unspent monies as apply across the University. The Reserves policy sets these out. Any school, service department or other unit should, if contemplating charging for a service for the first time, consult either the College Accountant or the Finance Department. Areas of the University that are already resourced to undertake an activity, via the annual planning round, cannot expect to then also recharge users for that service, as this would amount to double-funding of an activity. Knock-for-knock arrangements (a complex exchange of services and funding across the university-nhs boundary) should be avoided; services delivered in a reciprocal fashion should each be costed out separately. 28 th April

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