Accounts Payable Basics - Controller's Office

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					                     Accounts Payable Basics:
                        Vendor Payments

                                  Steven Engen
                             Manager, Accounts Payable
                              UCSF Controller‘s Office
                                  April 11, 2008




                                                                               1

Professional Development      Training        Performance          Solutions

                http://acctg.ucsf.edu/accounts_payable/index.htm
                                                 Introduction

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                              Objectives

      • AWARENESS of relevant policies and
        procedures
      • General information about existing
        Accounts Payable PROCESSES
      • TOOLS to help you stay informed



HR Development and Training
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HR Development and Training
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                       Who Does What in A/P?
      AP Customer Service Desk
      • 415-476-2126 APServiceDesk@ucsf.edu
      • Initial point of contact with vendors & departments
      • Respond to payment status requests
      • Provide general information
      • Provide BMI images to departments upon request
      • Coordinate research & resolution for past-due
        invoices

      Link to AP Org chart
         http://acctg.ucsf.edu/org_charts/Disb_AP.pdf

HR Development and Training
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      Travel & Entertainment
      •    Airfare, Allowances (Employee Uniforms)
      •    Car Rental, Conference Fees
      •    Employee Reimbursements, Honorarium
      •    Hotel Fees, Limousine Services
      •    Lodging, Meeting & Entertainment
      •    Membership Fees/Dues
      •    Moving/Relocation Services (Employees only)
      •    Parking (Travel Related only), Registrations Fees
      •    Restaurant/Catering Services, Subscription Fees
      •    Travel Advances


HR Development and Training
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      Disbursementsedit Master title style
      • Wire transfers
      • Foreign drafts
      • Daily pay cycle / check write
      • Coordinate the BMI (document imaging)
        process
      • Stops/Cancellations/Voids
      • Research returned checks




HR Development and Training
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      General Processing/Operations
      • Blanket Contracts (90000xxxxx)
      • Specific POs (0000xxxxxx)
      • Low-Value ―Speedchart‖ POs (12345D9876)
      • Freight/Courier
      • Check Requests for:
                Utilities (PG&E, Phone Bills, Water, etc.)
                Research subjects & clinical trial participants
                Misc Services/Supplies
                Petty Cash
                Subcontracts and subrecipient payments
                Patient Refunds

HR Development and Training
      EDI & Exceptions
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      • Resolve discrepancies with EDI vouchers
      • E-mail departments to request valid PO information
        for EDI vouchers
      • Forward invoices > $2,500 sent directly to A/P to
        departments for approval
      Vendor Relations
      • 1099 issues/compliance
      • Set-up and maintenance in PeopleSoft of:
            Vendors (W-9 certification, SVI forms)
            Speedchart
      • Deposits – Distribute Vendor refunds
      Mail & Distribution, A/P Accounting, Research

HR Development and Training
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                      What Does A/P Strive For?
           The mission of the Disbursement Accounting Unit
           (Accounts Payable Travel and Payroll Services) of
           the Controller’s Office within UCSF is to provide
           timely and accurate payments to employees,
           vendors, students and travelers. Furthermore, this
           unit is responsible for compliance with institutional
           policies, applicable laws and regulations, the
           safeguarding of University Assets, and transmitting
           of supported financial data to the general ledger.
           Lastly, Disbursement Accounting must work closely
           with its customers to provide timely answers,
           comprehensive training and effective service levels.
HR Development and Training
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            What Resources Does A/P Rely On?
      As an accounting function of a public research
        university, UCSF Accounts Payable is
        responsible to adhere to…
      Federal and state laws, regulations, OMB
        circulars, GASB letters, Regents directives
        and UCOP guidelines (such as Business &
        Finance Bulletins, Accounting Manual),
        UCSF campus policies, and more.


HR Development and Training
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      Paying for Common Goods &
       Services
      • A/P’s Role in Invoice Processing in
        Response to Purchase Authorizations
      • General Disbursements and Vendor Issues
      • Sales/Use Tax




HR Development and Training
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              Invoiceto edit Master Response to
                   Purchase Authorizations

      • Which comes first, the authorization or the
        approval?

      • A/P at the ―tail end‖ of the procurement life
        cycle.




HR Development and Training
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              Invoiceto edit Master Response to
                   Purchase Authorizations
      Accounts Payable looks for
       evidence of both Authorization
       and Approval

      No payment transaction should lack
       appropriate authorization, approval
       and substantiating documentation

HR Development and Training
                Click Processing in title style
              Invoiceto edit Master Response to
                    Purchase Authorizations
              All payment requests must evidence
           • Authorization — a commitment (P.I., buyers)
                 - By an authorized individual
                 - In form of a requisition, purchase order, contract,
                   agreement or letter of understanding
           • Approval — an acknowledgement (departments)
                 - By an individual with relevant knowledge
                   and authorized to approve transactions for payment



HR Development and Training
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        Invoiceto edit Master Response to
             Purchase Authorizations
      Understanding CPBC’s Role
      • Has authority to make purchase
        commitments
      • Provides procurement services
      • Assures purchase don’t violate policies
      • Negotiates appropriate price/quality mix
                  Link to their web site at
                              http://cpbc.ucsf.edu

HR Development and Training
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              Invoiceto edit Master Response to
                   Purchase Authorizations
      Invoice–a vendor’s request for payment in response to
         a Purchase Authorization issued by
           - Campus Department with LVPA delegation
                    Low-Value ―Speedchart‖ PO (23456D1234)
         - Purchasing Department buyers
                    High-Value ―Specific‖ PO (0000123456) or
                    Vendor Blanket (9000012345)
      To learn more about these Purchase Authorizations, see
         the Campus Procurement Purchasing Guide at
        http://cpbc.ucsf.edu/files/files/Purchasing_Guide.pdf
HR Development and Training
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        Invoiceto edit Master Response to
             Purchase Authorizations
      Low Value usage and limits:
             Common Goods & Services:
            not to exceed $2,500 per transaction (larger orders
             not to be artificially divided to circumvent limit)
           Equipment:
            not to exceed $2,500




HR Development and Training
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              Invoiceto edit Master Response to
                   Purchase Authorizations
      When NOT to use LVPA
       Over the Low Value dollar limit
       On the Low Value Restricted Items List *
      Vendor Blanket required for
       Scheduled purchases from same vendor



HR Development and Training
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      •    * RESTRICTED ITEMS (You may not use a low-value purchase requisition for these)
      •    Goods or services in excess of department's authorized limit
      •    Alcohol, beverages and ethyl alcohol
      •    Animals
      •    Automatic External Defibrillators (AED)
      •    Bio-hazardous agents and Human tissues/fluids (bio-safety authorization required)
      •    Bio-safety cabinets
      •    Boats
      •    Catering
      •    Charters (air, land or sea)
      •    Compressed gases:
      •    Toxic Gases
      •    Pyrophoric Gases
      •    Construction, alteration, repair or improvement to any University structure. E-mail
           Facilities Management Customer Service for more information.
      •    Equipment (defined as a freestanding item greater than $5,000 with a useful life of at least
           one year)
      •    Equipment rental or lease in excess of 30 days or in excess of $2,500.00 fee
      •    Firearms, explosives, ammunition
      •    Floor coverings (carpets and rugs). Use a Physical Facilities work order and e -mail
           Facilities Management Customer Service for more information.
      •    Fume hoods and Slot hoods
      •    Furniture
      •    Goods or services from any officer or employee of the University or from a near relative of
           any officer or employee
      •    Lasers
HR Development and Training
       •
       •
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            Meals, travel, or entertainment expenses
            Narcotics, controlled substances, DEA controlled chemicals and/or dangerous drugs
       •    Pager services
       •    Personal items
       •    Pesticides
       •    Postage
       •    Precious metals
       •    Pressure vessels
       •    Professional and Personal Services (including Independent Contracting and Independent
            Consultant Services)
       •    Radioactive materials
       •    Real estate rentals or leases
       •    Refrigerators/freezers
       •    Relocations: household or office moves
       •    Respiratory protection items
       •    SCUBA equipment
       •    Subcontracts, sub-awards, or agreements involving sponsored projects
       •    Superconducting magnets
       •    Window treatments, including blinds and curtains. Use a purchase requisition for
            individual orders and a Facilities work order for large/multiple orders. Contact Facilities
            Management for more information.
       •    X-ray machines, cabinet radiography, electron microscopes
       •    Items where a contract is required. Do not sign supplier contracts/agreements, including
            those for maintenance, service or blanket agreements, vehicle rentals, leases or
            purchases.
HR Development and Training
                Click Processing in title style
              Invoiceto edit Master Response to
                   Purchase Authorizations

      High-Value Invoice Processing Mode — A/P
        Initiates, Department Responds
           • Individual authorized for budget signs invoice as
             approver and returns to A/P (positive approval)
           • Invoice does not pay until returned and matched
           • Department retains a copy for own purposes



HR Development and Training
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           Invoiceto edit Master Response to
                Purchase Authorizations
           What Does It Mean when a Department
            Approver ‗Approves‘ an Invoice for
            Payment?
           • Confirmation of receipt and acceptance of goods
             and services
           • Certification that transaction is acceptable and
             conforms to purchase order
           See ―Process for High-Value Invoice Approval‖ at:
           http://www.acctg.ucsf.edu/accounts_payable/communica
              tions/High-Value_Invoice_Approval.pdf
HR Development and Training
         I’m an important person in my department;
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         therefore, I must have authority to sign as
                     an approver…right?
      • You do not have the authority to sign contracts or raise
        purchase orders on behalf of UC unless delegated to
        you by Regents/Chancellor/Campus Materiel Manager
            Must go through Campus Procurement & Business
             Contracts Office
      • No agreements should be executed outside established
        policy and procedure parameters
            Know contract authorization vehicles and limits
      • No services should be performed without a fully
        executed Letter of Understanding, Purchase Order, or
        Business Contract.
            Violations could result in personal/institutional liabilities

HR Development and Training
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              Invoiceto edit Master Response to
                   Purchase Authorizations
      Low-Value Invoice Processing Mode — A/P
        Initiates
           • Invoices from Regular Vendors ($2500 or less)
           • Processed (vouchered) first in A/P to pay according to
             terms
           • Copy of invoice sent to department indicating voucher
             number, date processed, and initials of bill payer
      • Negative Approval (No response from
        department = approval to pay invoice)

HR Development and Training
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              Invoiceto edit Master Response to
                   Purchase Authorizations
      Check Request & Pre-Approved Invoice
       Processing Mode — Department Initiates
           • Processed and approved first in department
           • Sent ―payment-ready‖ to A/P for final payment
             processing
           • This category includes vendor invoices, Form-U5,
             Travel Advance Requests, etc.



HR Development and Training
                Click Processing in title style
              Invoiceto edit Master Response to
                   Purchase Authorizations




HR Development and Training
            Click A/P Looking for on an Invoice or
       So, What isto edit Master title style
         Check Request submitted for payment?


      Accounts Payable looks for evidence of
       both Authorization and Approval
      No payment transaction should lack
       appropriate authorization, approval and
       substantiating documentation


HR Development and Training
                    Click to edit Master title style
                  All payment requests must evidence

      • Authorization — a commitment
           • By an authorized individual (PI‘s, LV buyers, CPBC)
           • In the form of a requisition, purchase order, contract,
             agreement or letter of understanding
      • Approval — an acknowledgement
           • By a departmental approver (signer with authority to
             disburse from the budget in question)
           • In the form of an invoice or payment request
             referencing a valid authorization

HR Development and Training
                Click Processing in title style
              Invoiceto edit Master Response to
                   Purchase Authorizations
      INVOICE ELEMENTS:
      • Who – From a Vendor to UCSF
      • What – List of Goods or Services
      • When – Date Provided/Delivered
      • Where – Place Shipped or Performed
      • Why – An Appropriate
               Purpose/Authorization


HR Development and Training
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         Invoiceto edit Master Response to
              Purchase Authorizations
      A/P Verifies Certain Information on Invoices:
      • Verification of vendor name, address
      • Arithmetical accuracy
      For Specific Purchase Orders, also:
            Quantity, unit price, totals
            Freight, FOB, taxes



HR Development and Training
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                        Invoice Hits and Misses

      Quiz
      • Is there anything wrong with the next invoice
        that was presented to A/P for payment?

      • If you see anything wrong, go ahead and say
        so.

      • What would enable this invoice to be paid?
HR Development and Training
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HR Development and Training
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                        Invoice Hits and Misses
      • What could the department do in order to get
        that shabby invoice paid?
                 • Hint: http://www.acctg.ucsf.edu/archives/pc/U5-2.xls
      • How will CPBC feel about $22,500.00 of
        services having been performed without a
        specific PO, contract, or consulting
        agreement?
                 • If this is paid without reference to a specific PO
                   or contract, it is called ―unsupported‖.

HR Development and Training
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                        Invoice Hits and Misses


      • Is there anything wrong with the next invoice
        that was presented to A/P for payment?

      • If you see anything wrong, go ahead and say
        so.

      • What would enable this invoice to be paid?

HR Development and Training
                       What Delays Payments?
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      •    Missing or invalid Purchase Order Number
      •    Invoice not billed to UCSF
      •    Misrouting in campus or postal mail
      •    Submitting the same invoice multiple times
      •    New vendor – not in vendor master file, and did not
           provide ITIN/SSN/FEIN/W-9
      •    Invoice submitted after expiration of PO
      •    Incomplete banking information for wire/draft
      •    Invoice dated after expiration of contract term
      •    Blanket/Contract number missing
      •    Department approver busy, on vacation, holding
           onto invoice
      •    Specific PO matching discrepancies (next slide)
HR Development and Training
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HR Development and Training
                 What Can I Do to Ensure Vendor
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                   Payments Are Made Timely?

      • Let’s go to page 24 of the CPBC Purchasing
        Guide online.
            http://cpbc.ucsf.edu/files/files/Purchasing_Guide.pdf


           Look at the next page for an ideal invoice.




HR Development and Training
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HR Development and Training
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                              Break Time



      • Would you like to take a 10-minute break?




HR Development and Training
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                    Clickall Vendors are title Same
              Who is Tax-Reportable? — Exempt?
      • Reportable: PeopleSoft compensation to
        individuals and sole proprietors for services
      • Exempt: generally corporate entities because
        they are ―fully audited‖
         AMC* D-371-12.1, Disbursements: Accounting for and Tax Reporting of
                      Payments Made Through the Vendor System
           http://www.ucop.edu/ucophome/policies/acctman/d-371-12-1.pdf
      • How to tell the difference: Payers expected to
           certify vendors on IRS Form
            Disclose TIN and residency/immigration status
            Certify to back-up withholding status
               W-9, Request for Taxpayer Identification Number & Certification
                 http://www.acctg.ucsf.edu/accounts_payable/forms/w9.pdf

HR Development and Training
               Click to edit Master Income
             Vendor Payments withtitle styleTax
                         Implications

      • What do you mean when you say that
        something is ―reportable‖ in A/P?
            In general, employees are paid through the Payroll
             System and their earnings are reported on a W-2.
            Non-employee miscellaneous payments are typically
             reported on a 1099-MISC. The IRS defines what
             types of payments, and to whom, need to be reported
             on which form.

HR Development and Training
              Click to edit Master Tax style
           Vendor Payments with IncometitleImplications
                              1099 Reportable
      • Fees for Professional Services (Resident or Non-
        Resident Alien)
      • Payments to attorneys for legal expenses
      • Health care commissions to non-employees
      • Damage payment - services prior to signing loyalty oath
      • Rent (unless paid to a real estate agent), Royalties
      • Prizes and awards to non-employees
      • Uniform allowance (under a non-accountable plan –
        lump sum allowances)
      • Human subject payments
                                 *Per tables in AMC* D-371-12.1

HR Development and Training
              Click to edit Master Tax style
           Vendor Payments with IncometitleImplications
                              Not Reportable on a 1099
      •    Lease-purchase agreement payments
      •    Overtime meals at the convenience of the employer
      •    Employee non-cash award expenditures (BFB G-41)
      •    Uniform allowance or reimbursement (under an accountable
           plan – business connection, substantiation, return of excess
           amounts )
      •    Vendor system settlement payments *Per tables in AMC* D-371-12.1
      •    Qualified Scholarship/Fellowship Payments
      •    Payments to employees, corporations (except Attorneys or
           Medical/Health Care Service Providers)
      •    Businesses that provide you with merchandise and suppies
      •    Payments to 501(c)(3) exempt organizations.


HR Development and Training
               Click to edit Master Income
             Vendor Payments withtitle styleTax
                         Implications
      • How does a payment get properly tax coded
        in PeopleSoft? Very carefully…
      • Tax coding accuracy requires
         Description of nature of transactions
         Correct disclosure of payee status
         Disclosure of location of activity
      • Types of TIN (Taxpayer Identification Number):
            Social Security Number (SSN) issued by SSA
            Employer Identification Number (EIN) issued by IRS
            Individual Taxpayer Identification Number (ITIN) issued by the
             IRS


HR Development and Training
               New topic: General Disbursement
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                             Issues
      Disbursement Check Controls - per policy
      • Check distribution should be directly to the payee
            A signed check may not be mailed or otherwise given to any
             person other than the payee.
      • Checks should be released to the department
        initiating the request on an exceptional basis.
            Designated and authorized department employee must sign for
             checks.
      • A check may not be given to a university employee who
        approved or caused its issuance.
        - Separation of duties, internal control


HR Development and Training
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                    General Disbursement Issues
      Cancellations/Stop Payments
      • Lost or stolen checks: immediately call Claudia
        Rubanov at x6-9291 or Carlos Zepeda at x6-2994
      • Immediately return checks which cannot be forwarded
        to the payee
      • Unclaimed check cancellation returns funds to the
        budget charged and reduces chances of fraud
      • Re-issuance of a stop payment check requires a sworn
        statement from the payee
        Contact Claudia Rubanov or e-mail disbursements@ucsf.edu for the vendor
                                check stop payment form.

HR Development and Training
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                            Wrapping it Up
      • Are there resources to help me stay
        connected with what’s going on in A/P?

      • Is there anything new I should know about?

      • Tell me something interesting about A/P.



HR Development and Training
                              Tools: Join the Listserv
              Click to edit Master title style
      A new ListServ, TRVL-AP-CNTCTS, has been created as a new
         method to communicate more effectively with the individuals at
         UCSF who are responsible for submitting invoices, check
         requests, and travel expense vouchers.
      This ListServ will provide useful and timely information to assist
         these individuals in completing their responsibilities.
      Examples of what would be distributed through this ListServ are:
      •    Announcements regarding travel, entertainment and Accounts
           Payable policy changes
      •    Tips and helpful hints about preparing travel expense vouchers
           and check requests
      •    Accounts Payable staffing updates
      •    Updates on Accounts Payable processing times and backlog
           information
      •    Training and Town Hall announcements
      •    Announcements when forms are updated
      •    Office closure schedules
      See the A/P Web Site ―Communications‖ for more information.
HR Development and Training
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                        Tools to Stay Informed
      • Using Weblinks A/P, you can find answers to all your
        pressing questions, such as:
            Has Invoice #343543 or Check Request CGRS1212 been paid?
            Has a particular A/P expense hit my ledger yet?
            When did A/P cut the check to Vendor X?
            Is payment pending for Vendor X? If so, why?
            Show me all payment activity on Vendor X for DPAs I have
             access to.
            I need to print a copy of an EDI ―Z‖ Voucher.
           For step-by-step instructions to use Weblinks, visit:
                 http://acctg.ucsf.edu/OLFS/training/WebLinks%20Manual_P
                 DF%20Files/6-WebLinks_AP-PO.pdf

HR Development and Training
                      Tools: Weblinks   “Has That Invoice Been Paid?”

                    Click to edit Master title style




HR Development and Training
                                       New Tools: P2P
                          to edit Requisition to title style
                    Click Department Mastera PO
                           Route for  System Converts

                                 Approval
                                                                               CPBC
                  Department                                                Intervenes
                                                                            as Needed
                   Creates
                  Requisition
                                                                                       System
                                                                                     Dispatches
                                                                                        PO To
                                                 Reporting                             Vendor




                                                                                 Department
                 Department                                                        Records
                                                                                  Receipt of
                 Reconciles
                                                                                    Goods
                  General
                   Ledger                                               A/P System
                                Department Resolves                      Receives
                                      Match                   System      Invoice
                                  Exceptions and             Performs
                                System Pays Vendor           Matching
HR Development and Training
                Click to edit Master title style
              Interesting Fact: Did You Know….
      • In an average month during 2006, the UCSF
        A/P office disbursed approx. $48,000,000
        (that’s over $576,000,000 in one year!)
      • In an average month during 2007, the UCSF
        A/P office disbursed approx. $56,000,000
        (that’s over $672,000,000 in one year!)
      • That’s almost a 17% increase from one year
        to the next.

HR Development and Training
                    Click Let’s Talk About Tax
                          to edit Master title style
                           (Time Permitting)

      True or False?

      • Because UCSF is a state-chartered entity, it
        is not required to pay sales & use taxes to
        the State of California.




HR Development and Training
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                                Answer




                              FALSE!


HR Development and Training
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                           Sales & Use Tax
      • Sales Tax: Imposed on retailers for the privilege of
        making retail sales of tangible personal property in
        California.
            Collected by the retailer

      • Use Tax: California imposes use tax on every ―person‖
        who stores, uses, or consumes in the state tangible
        personal property purchased from an out-of-state
        retailer.
            Self-assessed

HR Development and Training
                     Sales edit Master title style
                    Click to & Use Tax Overview
                                                                     University as a Seller
       University’s                                                    Collects Sales Tax
       Supplier

                                                                   University Departments:
                                                                    Bookstore, cell culture,
                                                                    dining, medical center,
                                      The University
                                                                      health services, retail
      University as a Purchaser
      Pays Sales Tax or Self-                                       services, techstore, etc.
      Assesses Use Tax
      University Departments:                                             University’s
      Accounts payable, cardiology,                                       Customer
      medical center, pharm. chem.,
      procurement, urology, etc.
                                           Indicates the flow of tangible personal property
HR Development and Training
                    Click to edit Master title style
                    Sales & Use Tax Definitions
      A retailer is defined as every seller who makes any retail sale. A seller
         includes every person engaged in the business of selling tangible
         personal property.

      •     A person includes the following:
                Individuals, various types of business organizations
                Trusts, estates and social organizations
                California State government agencies
                US government is an exempt ―person‖

      •    A non-person on whom California imposes no Sales or Use Tax
           includes the following:
           - Non-Californian State governments and their institutions
           - Foreign governments/provinces and their institutions

HR Development and Training
                           Sales & Use title
                    Click to edit Master Tax style
                          Specific Purchases
      • Labor Charges
                Installation: Exempt
                Repair: Exempt
                Fabrication: Taxable
                Assembly: Taxable

      • Maintenance Contracts
            Mandatory: Taxable
            Optional: Exempt, if separately stated

HR Development and Training
                           Sales & Use title
                    Click to edit Master Tax style
                         “Canned Software”
      • “100% taxable” if involving transfer of tangible
        personal property
            Purchases of ―canned‖ software including charges for
             license fees, site licensing and other end user fees
            Mandatory maintenance contracts including
             consulting services purchased with ―canned‖ software
             take on characteristic of original purchase
      • “50% taxable” with tangible personal property
            Optional maintenance contracts for ―canned‖
             software

HR Development and Training
                           Sales & Use title
                    Click to edit Master Tax style
                         “Canned Software”
      • Exempt—no transfer of tangible personal
        property involved
            Purchases of ―canned software‖ transferred by
             remote telecommunications to the purchaser‘s
             computer.
            Purchases of ―canned software‖ transferred by
             vendor via ―load and leave‖.
            Purchases of stand-alone OPTIONAL maintenance
             contracts, unbundled telephone support, updates,
             etc.
HR Development and Training
                           Sales & Use title
                    Click to edit Master Tax style
                         “Custom Software”
      • Custom Software
            Software created and tailored specifically for a particular
             customer application.
            ―Custom software‖ also includes modification of ―canned‖
             software at a charge of 50% or more of its purchase price.

      • Exempt:
                Purchase of custom software
                Optional maintenance contract
                Mandatory maintenance contract
                Separately stated modification charge

HR Development and Training
                           Sales & Use title
                    Click to edit Master Tax style
                         University as Seller
      • California holds sellers responsible for sales tax.
      • Tax applies to all sales tangible personal property
            Student organization fund raising (sale of lab notebooks, candy-
             filled coffee mugs)
      • Maintain proper records
            Deposit tax collected into proper liability account
            Contact Lihua Gu in General Accounting for guidance
      • Exemptions for ―convienience‖ & ―occasional sales‖
            Contact Lihua Gu in General Accounting for guidance



HR Development and Training
               Click Use Tax Recovery Audits
             Sales &to edit Master title style
                       Most Common Tax Accrual Overpayments

    By dollar amount:                   By frequency
    •Invoice with tax                   •Freight
    •Goods used/shipped                 •Medicines
    outside CA                          •Invoice with tax
    •Services                           •Services
    •Medicines                          •Goods used/shipped
    •Construction contracts             outside CA



HR Development and Training
   Tangible personal property (TPP)?                     NO              M aintenance agreement?                               YES            On computer hardware - exempt. (if optional)


                             Click to edit Master title style
                                                                                                                                              On computer software - generally taxable.

                                                                         Construction contract?                                YES            Construction contractor is responsible for tax if
                                                                                                                                              lump sum or time and material.
                                                                                                                                              Labor is taxable if for new assembly or
                                                                         Labor or consulting?                                  YES            fabrication of TPP. Exempt if repair, installation,
                                                                                                                                              or consulting unrelated to the purchase of TPP.
                       YES


   For resale?                                           YES             Issue a resale certificate or resale P.O.
                                                                         to your vendor.

                       NO

   Purchased from a California seller for the                            Has a resale certificate been issued to               YES            Accrue sales tax and report on sales and use
   University’s use with delivery and title              YES             the seller?                                                          return in the period of purchase.
   transferring in California?
                                                                                                                                NO            Do not issue a resale certificate or accrue use tax.
                                                                                                                                              Seller is responsible for collection and payment
                       NO                                                                                                                     of state tax.

   Purchased from out-of-state vendor?


                       YES

   Has seller charged California tax?                    YES             Was the correct California tax rate                   YES            Remit tax with payment to the vendor.
                                                                         charged?                                                             Retain invoice as a receipt for tax paid.

                       NO                                                                                                       NO
                                                                                                                                              Remit tax billed with payment to the vendor.
                                                                                                                                              Accrue difference and report use tax on return in
   Has seller charged another state’s tax?                                 Do not remit the tax billed on the
                                                         YES                                                                                  the period of purchase (calendar quarter).
                                                                           invoice and accrue use tax and report
                                                                           on sales and use tax return
                       NO
                                                                                                Ite ms to exclude from the measure of tax:             Ite ms to include from the measure of tax:
                                                Note :
   Accrue and pay use tax on SBE return in                                                      1. Common carrier freight charges to the University.   1. Handling charges.
   the period of purchase.                      T PP:     T angible personal property.          2. Repair and installation labor.                      2. Freight-in to seller’s location.
                                                                                                3. Services not related to the purchase of TPP.

HR Development and Training
                    Click to edit Master title style
                           Sales & Use Tax
      • Where to go for help?
         Accounting Manual chapter on Sales/Use Tax
           http://www.ucop.edu/ucophome/policies/acctman/t-182-73.pdf
            UC Sales & Use Tax Manual
           http://www.ucop.edu/ucophome/policies/sutm/
      • Call Li Gu, x6-0804
           lihua.gu@ucsf.edu




HR Development and Training
                                           Thank You




          We strive to provide the highest quality, accountability, and
          efficiency in payment services within the UC System for our
                          customers and stakeholders.


                     Please send any comments about this course to
                      Steven.Engen@ucsf.edu or call 415-476-8449.




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