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Internal Audit Office

Kansas State University
5 Anderson Hall
Manhattan, KS 66506-0118

 

785-532-7308
785-532-0186
internalaudit@k-state.edu

Policy on Sales of Products and Services

Chapter 6080
Revised May 16, 2014

Table of Contents

.010 General Information
.020 Criteria - Sales of Products & Services to Students (etc)
.030 Criteria - Sales to External Community
.040 Questions

.010 General Information

It is the intent of this policy to establish guidelines for the conduct of sales of products and services for the state universities in fulfilling their required missions and statutory obligations, and establish principles upon which fairness in the sale of products and services is to be judged. The complex needs of the state universities require that a broad and flexible policy be established while at the same time making provision for the resolution of the legitimate grievances of the private sector which will occur from time to time. It is in the spirit of good faith and fair practice that this policy is established.

Any sale of products or services by a state universities, its auxiliary enterprises, or an affiliated corporation of a Regents institution (all hereinafter collectively referred to as "institution(s)") is deemed appropriate only if such sale is an integral part of or reasonably related to, an activity which is essential to the fulfillment of the institution's instructional, research or public service missions.

.020 Criteria - Sales of Products & Services to Students (etc.)

Such activities must meet the following criteria:

Criteria for Sales of Products and Services to Students, Faculty, Staff, and University Guests

1.   Institutions may sell products and services to students, faculty, staff, and university guests; provided, that the products and services satisfy reasonable educationally related or convenience needs of the university community and provided that such products and services are not generally available to persons who are not students, faculty, staff or university guests. University guests are defined as persons who enter a campus for an educational, research, or public service activity, and not primarily to purchase or receive products and services. Sales to university guests shall be related to the guest's purpose or needs while on campus.

2.   Institutions may sell products and services to students, faculty, staff, and university guests if the product or service contributes to maintaining the quality of the educational, living, or work environment of the institution. Most crucial to maintenance of quality are efforts which impact positively on student, faculty and staff recruitment and retention, including, but not necessarily limited to: student activity association entertainment; movies; athletic and recreational events and facilities; institutional operation of student health facilities; counseling centers; musical, cultural and artistic activities; and auxiliary enterprise activities.

3.   The appropriateness of sales of products and services to students, faculty, staff and university guests should also be weighed by the availability or non availability of the products or services in the community at the time sales were initiated. Availability may be defined in terms of convenience, quality or quantity of service.

4.   The sales of products and services to students, faculty, staff and university guests shall be advertised only in media which are aimed or specifically targeted to the university community or by other methods which are limited to the campus.

.030 Criteria - Sales to the External Community

In order for a product or service to be sold to the external community, two criteria must be met: 1) the product or service must be appropriate for sale; and 2) sale of the product or service must adhere to the appropriate policy on pricing. Any advertising of products or services appropriate for sale to the external community shall be reasonably related in content and cost to the product or service being sold.

1.   Appropriate Sales

The following is an exclusive listing of sales to the public which are deemed to be appropriate:

An institution may sell a product or service which is directly related to the achievement of its institutional mission statement.

An institution may sell a product or service where the sale enhances the academic, cultural, recreational, or artistic environment of the university community. This shall include, but not be limited to: attendance at addresses by public speakers, musical events, athletic events, museum exhibits, and art showings.

Products and services which are by-products of the institution's instruction, research, or public service activities may be sold to the public; however, production of products or services for commercial sale shall not be the primary use of any institutional facilities or resources.

Agricultural and mineral products produced from either research activities or from land owned or leased by the institution may be sold to the public.

An institution may sell food service, but such food service shall be limited to the institution's campus.

An institution may sell clothing and other gift and souvenir items imprinted with the institutional or conference logo, seal, emblem, initials, nickname, mascot or name.

An institution may sell gift or souvenir items related to the operation of university museums or similar facilities.

An institution may sell a product or service if it has specific state or federal statutory authority or mandate to do so.

An institution may provide a product or service pursuant to a grant or contract with a governmental entity to provide such product or service either to the entity or to the public.

An institution may offer a product or service to the external community if such product or service is unavailable elsewhere in the community and is reasonably related to the institution's mission. Unavailability may be defined in terms of convenience, quality or quantity.

Sale or distribution of tobacco products on state university campuses shall be prohibited.

2.   Pricing

In establishing a price or fee for products or services, the price should generally reflect the direct and indirect costs of the products or services and should minimally reflect the price in the private marketplace. For the purpose of this policy, direct costs include, but are not limited to: all salaries, fringe benefits, supplies, and capital directly attributable to the sale of the product or service. An institution's negotiated federal indirect cost rate shall be used to determine indirect costs.

If the activity is integral to the fulfillment of the institution's instructional, research or public service missions, prices may be established at less than full cost recovery upon approval by the institutional chief executive officer or the chief executive officer's designee.

All contracts offering products or services to other state agencies shall be priced in accordance with Board policy on "Contracts with Other State Agencies, Indirect Cost Reimbursement" in the Fiscal Management and Business Administration section of the Board of Regents Policy Manual, item 11. entitled Contracts.

If a product is an agricultural or mineral product produced either as a by-product of teaching or research activities or as a product of land owned or leased by an institution, such product shall be sold for its market value.

.040 Questions

This policy was established by the Kansas Board of Regents January 1991, updated April 2014. Please direct questions to the KSU Division of Financial Services, Financial Reporting and Asset Management, (785) 532-3807.