External Sales and External Cost Recoveries

In this section:

External Sales
External Cost Recoveries
Summary of Processing Requirements – External Revenue and External Cost Recoveries
Appendix 1 – Guidelines for Specific Types of External Sales
Appendix 2 – External Cost Recovery Scenarios

 

Contact for questions about these guidelines

revenue.procedure@ualberta.ca

External Sales

External sales include:

  • revenue from fee-for-services activities and from the sale of products to external parties (e.g. other entities, individuals including university students) in exchange for the fee/price determined by the selling unit.
  • certain types of revenue where the external party has an obligation to pay the university but does not receive services or products in exchange (e.g. parking fines, NSF charges)
    • operating grants for student employment programs and other small ($5,000 or less) operating grants. In the interests of efficiency, units can process these to F210 using sales account 402001 – External Revenue General.

External sales are processed as soon as the service or product has been provided or, in cases where services or products are not provided (e.g. fines), when receivable.

Examples of external sales are fees for parking, conferences, admission and memberships, sales of materials such as books and lab supplies, and rental of facilities.

Only external sales revenue to which the university is legally entitled can be processed through the university’s financial system. Units may not use the university’s financial system to process revenue belonging to a third party including external organizations, University of Alberta staff, students and student groups (e.g. staff coffee funds, social group funds).  

Refer to Appendix 1Guidelines for Specific Types of External Sales.

Determining External Sales Pricing

Selling units should ensure that, at a minimum, they recover their direct costs. Where possible, and depending on the unit’s mandate, indirect costs should also be reflected in sales pricing.

Direct costs are those that are accurately attributable to the specific sales activity, such as the cost of material, labor or administrative time and other costs that can be accurately measured.

Indirect costs are those that are not accurately attributable to the sales activity but that are necessarily incurred to allow the sales activity to occur, such as salaries of Chairs and administrative staff, regular telephone service, or supplies used but not specifically charged out. Indirect costs are typically applied as “markup” based on a percentage. For example, this rate can be calculated as budgeted indirect unit costs divided by budgeted direct unit costs.

Selling units should review their sales prices on a regular basis.

External Sales Processes

External sales are processed through Cashier, the PeopleSoft Billing module, or through an approved interface from an external billing system to the Billing module.

The decision to process external sale transactions through Billing or cash sales is dependent on the appropriateness and cost effectiveness of the process, taking into consideration the nature of the unit’s customers, the type of services or products being sold and the volume of transactions.

Generally, the cash sales process is appropriate where the selling unit has a high volume of relatively low value transactions and customers are physically present to pay for services and products (e.g. a retail operation). Point of Sale (POS) is considered cash sales along with WEB based payment systems.  For many selling units, billing is the most appropriate process given the dollar value of transactions, type of customer (e.g. other organizations) and the nature of the activity (e.g. services, rather than products, are being sold).

Billing must be used to process sales and expense recoveries in all relevant situations to ensure that the university’s financial statements and internal reports are accurate by recording revenue when earned and to maximize efficiency for all stakeholders by reducing handling of cash in units and enabling Financial Services – Accounts Receivable to manage customer payments and accounts.

 

In the interests of efficiency:

  • Senior Financial Officers are encouraged to centralize billing activities at appropriate points within the faculty.
  • Faculties/units with low volumes of billing activity (e.g. 10 or fewer billings per year) may contact fsar@ualberta.ca for keying service.
  • Units with high volumes of billings must explore whether they should process billings in a third party system and import their billing activity into the Billing module using an interface. Contact Financial Services – Accounts Receivable (fsar@ualberta.ca) to coordinate the setup of an interface.

Units with regular selling activity will use a detailed 402xxx account or request a new account if an appropriate detailed account is not available. Units with ad hoc sales or very low volume selling activity may use account 402001 – External Revenue General.

Recording External Sales Revenue in the Appropriate Fiscal Period

Occasionally, external sales revenue is received or billed at a different time than the products or services are delivered. Units are required to assess whether they need to defer or accrue revenue at certain times of the year for financial reporting purposes.

Deferred Revenue

Deferred revenue is revenue from external sales (402xxx) and non-credit fees (4031xx) that the unit has processed in advance of providing the products or services.

Very few units are required to use deferred revenue accounting. Some revenues are received in advance (e.g. program fees); however, the products or services are usually provided and the revenues processed within the same fiscal year, or the year-over-year difference is not material. Deferred revenue accounting may be requested by the unit if the revenue received exceeds $100,000 but the products or services will not be provided until a future fiscal year. The unit will provide supporting documentation and rationale to Financial Services for recording the transaction as deferred revenue. Financial Services will assess the transaction and make the determination as to whether deferral is appropriate.

Note: Deferred revenue represents a liability to the university until the products and services have been provided, at which time the revenue is recognized. As the university records liabilities only when it has external legal or contractual obligations, internal sales between units are not subject to deferral.

The following table summarizes the action required by units.

APPLICABLE TO

ACTION REQUIRED

TYPICAL EXAMPLES

Funds:

  • Operating (F210, F310)

 

Accounts:

  • External sales (402xxx)
  • Non-credit fees (4031xx)

Specific units only (with material deferred revenue activity throughout the year and specific deferred revenue accounts). This mainly applies to ancillary units.

  • code revenue to the unit’s specific deferred revenue account
  • process accounting entries through the GLJE user interface to recognize the revenue when the products or services are delivered
  • rental of housing
  • parking fees
  • student dining plans
  • OneCard deposits
  • non-credit student fees

All other units:

  • must receive approval from FS to use this accounting mechanism
  • advances or deposits paid by students or other customers according to the contract/agreement (recommended minimum $100,000 per activity)

Accrued Revenue

Accrued revenue (unrestricted funds) is operating revenue from external sales (402xxx) and non-credit fees (4031xx) that the unit has earned (i.e. has provided the product/service) but has not yet processed through external billing or cashier.  Accrued revenue represents an asset (receivable) to the university until the payment for the products/services has been received. As the university records assets only when it has external receivables, internal sales (to other University of Alberta units) are not subject to accrual.

Revenue accruals for external billings are generally not required as units have additional time at the university’s month-end and year-end to process these billings. There are however some limited circumstances when an accrual may be required.

Units should not delay billing. If the delivery of a product/service is partially complete at year-end and under the agreement a progress billing is allowed, then a work-in-progress billing should be issued, within the processing deadline, for costs incurred to date. When the final billing is issued in the new fiscal year, the amount of the work-in-progress billing should be deducted from the total cost.


Accrual requirements:

  • Most units accrue at year-end only; some units may accrue more frequently.
  • Units are required to accrue revenues equal to or greater than $10,000.00 per item or an accumulation of items totaling $10,000.00 or more. At the discretion of the Senior Financial Officer (SFO), a lower threshold may be applied.
  • GST is not accrued as this amount is not material.
  • Accrual of revenues is requested by submitting a GLJE Request (with attached Accrual Template form) and supporting documentation.
  • Signature from SFO on the GLJE Request form is confirming that the accrual is accurate, appropriate and that there is support at the unit level that the product/service has been delivered.
  • The following represent when an accrual may be required (taking into account the accrual threshold of $10,000.00):

 

Reason

Supporting documentation required

Products/services provided, final amount not available.

Agreement (e.g. purchase order, work order, contract), with date of product/service provided and an explanation of why the final amount is not available.

Cashier closes on March 31

Provide copy of cashier Deposit Form.
Note: please ensure all deposits are made to central cashier on a timely basis leading up to March 31.

FS Standard Support Template

FS Standard Support Template
Note: FS in consultation with the SFO will develop a Standard Support Template for those accruals that are recurring (within year, or from year to year).

Other

Will require additional explanation as to why an accrual is required. A copy of the invoice is required. If an invoice is not available, then SFO would contact FS to discuss and determine appropriate supporting documentation.

External Cost Recoveries

External cost recoveries are difficult to clearly define and are subject to different interpretation both internally and externally.  FS has performed an analysis (that included a review of transactions along with the backup and discussion  with various units) of transactions processed as credits to expense accounts, and has ascertained that the majority of these transactions should be processed as an external sale. In the case of restricted funds (e.g. research, endowments) some of this activity was a grant. Both volume and dollar value of these transactions is not significant and the higher volume occurs in the operating funds. In the interests of efficiency, consistency and clarity the university will adopt the following processing requirements for transactions that units may refer to as "recoveries":

  • In the operating funds most “recoveries" will be treated as revenue (sales of products and services - account range 402xxx). Some very specific scenarios will be treated as a credit to an expense account.
  • In the restricted funds (e.g. research, endowments) all “recoveries" will be credited to the appropriate expense account. The different treatment in the restricted funds is a result of granting agencies (e.g. NSERC) not allowing other revenues to be processed to the grant project. There is generally low volume.

External cost recoveries are processed when receivable or received.

Note: University business processes are to be used only for University of Alberta activities. Under no circumstances should university business processes or resources be used for non-university related expenses (e.g. employee’s personal expenses in order to obtain preferential pricing, the GST rebate or to use university funds as a loan), even if these are reimbursed to the unit at a later date.

For examples of external recoveries and the appropriate treatment, refer to Appendix 2 – Cost Recovery Scenarios.

Summary of Processing Requirements – External Revenue and External Cost Recoveries

ITEM

SUMMARY OF REQUIREMENTS

Transaction processing

By units approved to process sales, via:

  • entry into External Billing (GAR – commercial customers; and PAB – Government of Alberta and related parties)
  • user interface to External Billing
  • Cashier

Supporting documents for transactions

One or more of the following:

  • price list or fee schedule
  • agreement with third party
  • external billing
  • deposit form and cash/POS receipt

COA Coding – External Revenue

Operating funds only*:

F210 (Operating)

F310 (Ancillary Enterprises)

F330 (Research – Operating)

 

Accounts: 402xxx External Revenue

 

* Pursuant to approval by RSO, a restricted research activity funded by grant revenue may, through the life of the project, include a small amount of sales revenue

COA Coding – External Cost  Recoveries

Determined by fund type:

Operating Funds – generally, external cost recoveries are credited to 402xxx (external revenue) accounts

Restricted Funds – generally, external cost recoveries are credited to the same 50xxxx (expense) account

For further clarification refer to Appendix 2 - Cost Recovery Scenarios.

 

 

Tax Coding

Deposit Form: TS, ES, ZS or N

Billing: TS, ES, ZS, N or HST

Refer to Goods and Services Tax Coding (GST) in this chapter.

Transaction Corrections

Processed via:

  • BIL transactions – unit corrects in External Billing
  • CSH transactions -  unit submits Cashier Deposit Correction Form

External Revenue Accrual

Required when:

  • revenue has not been received or billed for products or services that have been delivered by March 31
  • cash received by end of the university’s fiscal year is not processed in Cashier until after March 31

Very few units are required to accrue revenue. Refer to Accrued Revenue in this section.

External Revenue Deferral

May be required when revenue exceeding $100,000 has been received or billed for products or services to be delivered after March 31.

Very few units are required to defer revenue. Refer to Deferred Revenue in this section.

Bad Debts

Financial Services – Accounts Receivable (FS-AR) writes off outstanding accounts at approximately 120 days past due to the billing unit (account 502671 – Bad Debt).

Training Resources – External Billing

PeopleSoft Financials/Self-Service Center/Financials Online Training

 

 

Links:

PROCESS

APPLICABLE UAPPOL PROCEDURES

Billing

External Billing Procedure

Cash Sales

Cash Depositing Procedure

Electronic Funds Transfer (EFT) Incoming Payment Procedure

Appendix 1 – Guidelines for Specific Types of External Sales

This appendix provides guidelines on the following types of transactions that are processed as external sales (coded to 402xxx accounts).

  1. Conference Revenue  
  2. Cheques Redirected for Deposit to the University
  3. Deposits - Amounts Held on Deposit
  4. Equipment and Furnishings Sales
  5. Royalties and Rights Revenue
  6. Small Operating Grants
  7. Sponsorship Revenue

1.   Conference Revenue

Many units host conferences and similar functions such as symposia, colloquia, workshops and seminars. Generally, the cost of hosting these events is covered from numerous sources. These guidelines address the appropriate processes for revenues and other financial resources typically used to fund these events.

Units are expected to have appropriate supporting documentation including a budget for each conference. 

Processing Conference Revenues and Other Funding

The following summarizes the processes to be generally followed for various types of revenue and other typical conference funding.

Note: The exception is conferences that are primarily funded from a restricted grant. In this case, revenue from other sources (e.g. registration, sponsorship) and all related expenses will also be processed to the project.

TYPE OF FUNDING

TRANSACTION PROCESS

CODING

Registration and related fees (may include separate fees for banquets, optional events, etc.)

Cashier

 

See Note below re options to consider.

Fund: F210 (Operating)

Account: 402025 (Conference Reg Fees Ext)

GST: TS (ZS if government entity provides letter of exemption)

Sponsorship

(refer to Sponsorship Revenue in this section)

  • External Billing
  • Cashier

Fund: F210 (Operating)

Account: 402182 (Sponsorships)

GST: N

Sales of products at conference

Cashier

Fund: F210 (Operating)

Account: appropriate 402xxx acct

GST: TS

Sales of publications post- conference

  • External Billing
  • Cashier

Fund: F210 (Operating)

Account: 402046 (Books & Publications Ext)

GST: TS

Internal funding

  • Budget Journal
  • GLJE Request

Refer to form

Restricted Grants

  • Request for External Research Billing Form (Research Services Office - RSO)

As determined by RSO

 

Donations

Donation Deposit/Pledge Transmittal Form

As determined by Office of Advancement

Note: For efficiency of processing registrations and to minimize the cost of using staff resources for a one-time event, units are encouraged to consider the following options:

  • Arrange conferences through the Conference and Event Management division of Ancillary Services, which provides financial planning and revenue processing services including online registration and collection of fees. For further information regarding these and related conference management services, refer to the Conference Services web site.
    • Use a third-party service (e.g. EventBrite) to manage conference registrations and collect fees. These services will involve a commission fee. Contact Financial Services -Treasury (treasury.fs@ualberta.ca) for further information.

2.   Cheques Redirected for Deposit to the University

1.

2.

Cheques Made Payable to a University Faculty or Department

If a cheque is made payable in the unit name (e.g. payable to Department of Oncology instead of University of Alberta) and it is university revenue, the unit will process the cheque (as per procedures). The unit will also contact the customer and advise them to change the vendor name to University of Alberta. 

Cheques Made Payable to a University Staff Member

Occasionally a unit may be asked by a university staff member to deposit a cheque that has been issued in the name of the staff member. The unit must forward the cheque to the faculty office for deposit.

The faculty may deposit such cheques through Cashier as external sales revenue in the following circumstances:

  • the staff member will not be personally spending the money
  • the staff member endorses the cheque (i.e. signs the back) and writes “Pay to the order of the University of Alberta” below the endorsement.

 

Code the Deposit Form as follows:

FUND

F210 (Operating)

ACCOUNT

402001 (External Revenue General) or a specific 402xxx account

GST

N

 

Cheques issued to staff that are redirected for deposit to the university are not donations to the university and should not be sent to the Office of Advancement to process. If, however, the staff member intends to donate the money to the university, the staff member must deposit the cheque to their own bank account and write a personal cheque to the university. The Office of Advancement will determine whether the payment is a charitable donation.

3.   Deposits - Amounts Held on Deposit

 

Some units may charge a small deposit fee for an item (e.g. students are charged a deposit fee for receiving a key, which is then refunded upon return of the key).  Units should assess the cost / benefit of requiring a deposit versus a mechanism that keeps track of when the item should be returned (no financial transaction required). 

If a unit chooses to charge a deposit amount then the unit would deposit to their operating fund (account 402001 - External Revenue General).  Upon return of the item, the unit should pay out of petty cash. If a unit is required to pay via accounts payable the unit would charge to their operating fund (account 502101 – Supplies & Services General).  All cash collected must be deposited through Financial Services Cashier and not retained on site for the eventual refund.

 

4.   Equipment and Furnishings Sales

 

Disposal of surplus assets must be coordinated by SMS (Surplus Disposal) to ensure that all University procedures, legislative and other applicable requirements related to disposal of assets are fulfilled. Generally proceeds are negligible and are retained at the institutional level to offset the cost of disposal.  However, if a unit expects the proceeds to be significant, unit may request that the proceeds be deposited to the unit’s operating account (F210; account 502681 – Gain (loss) on disposal of assets).

UAPPOL:

 

Equipment Asset Disposal Procedure – Surplus

5.   Royalties and Rights Revenue

Very few units receive revenue from royalties and rights.

Revenue from royalties and rights arises from agreements between an external organization and The Governors of the University of Alberta as to the use of assets owned by the university. Royalties are typically based on the amount of benefit derived by the third party with whom the university has contracted. Revenue from rights is typically a negotiated fixed price which may change from time-to-time according to the agreement with the third party.

The university has identified several types of royalties and rights received by the university at the institutional or unit level.

Commercialization and Transfer of Intellectual Property

Inventions, ideas, designs, technologies, publications and a host of other types of intellectual property may arise in the course of conducting research. The university receives revenue from royalties and licensing fees related to the commercialization and transfer of intellectual property, which is generally referred to as royalty revenue. Copyright regulations are appended to each of the collective agreements with applicable staff. Refer to the Patent Policy regarding patentable intellectual property.

Note: Payments by external organizations from royalty agreements between the external organization and an individual employed at the university (e.g. principal investigator) are not university royalty revenue. These payments are not to be directed to the university and units must not process these payments. The external organization must issue the payment to the individual and must issue a T5 tax information slip to the individual, who is responsible for reporting the income on their personal income tax return.

Copyright Licensing

The university automatically owns the copyright upon creation of all copyright works (software, literary, artistic, dramatic or musical) produced by a staff member who has been engaged by the university to prepare such works for the university or part of whose normal responsibilities to the university is the preparation of such works. A license may be granted to third parties such as publishers to allow the work to be used under specified terms for a fee, usually based on the gross or net revenues to be derived by the third party. For copyright works “otherwise produced”, refer to the Government of Canada Copyright Regulations, which is linked at the end of this section.

Mineral Rights

Mineral rights may be either purchased by the university on land owned by an external party, or may be related to university-owned land that is used by an oil company to produce oil. Although referred to as “rights”, revenue from mineral rights is actually a type of royalty, as the amount of revenue generated from these rights is dependent on the volume of oil production.

Surface Rights

Surface rights are related to university-owned land used by an external organization (i.e. oil company) which makes payments to the university to access the land to service its oil wells. Revenue from surface rights is not a royalty as it is not dependent on the amount of oil produced.

 

Revenue from royalties and rights is processed as follows:

SOURCE OF REVENUE

TRANSACTION PROCESS

CODING

Commercialization and transfer of all copyright works (software, literary, artistic, dramatic or musical) produced by a staff member who has been engaged by the University to prepare such works for the University or part of whose normal responsibilities to the University is the preparation of such works.

 

Cashier: Centres & Institutes (C/I) only

Fund: F210

Account: 402030 (Royalties and Rights)

GST: N

Note: Some C/I are classified as restricted projects and therefore they would credit the restricted research fund (F530).

Cashier: Office of Vice-President (Research) (VPR) only

Note: The VPR may decide to transfer some of these funds to a unit.  The VPR currently transfers funds via GLJE Request (effective April 2017 will be a transfer via uPlan).

For further information:

  • see Distribution of Royalty Revenue Policy
  • refer questions to the VPR

Fund: F100

Account: 402030 (Royalties and Rights)

Commercialization and transfer of patentable intellectual property (IP) and “otherwise produced” copyright works

 

Cashier: Centres & Institutes (C/I)

 

 

Fund: F210

Account: 402030 (Royalties and Rights)

GST: N

Note: Some C/I are classified as restricted projects and therefore they would credit the restricted research fund (F530).

 

Cashier: Office of Vice-President (Research) (VPR) only

Note: The VPR may decide to transfer some of these fudns to a unit.  The VPR currently transfers funds via GLJE Request (effective April 2017 will be a transfer via uPlan).

 

Fund: F100

Account: 402030 (Royalties and Rights)

GST:N

 

For further information on the above two categories with respect to who can sign these agreements on behalf of the university, refer to: 
Contracts Review and Signing Authority Policy - Schedule A (Section B)

Copyright licensing of all copyright works (software, literary, artistic, dramatic or musical) produced by a staff member who has been engaged by the University to prepare such works for the University or part of whose normal responsibilities to the University is the preparation of such works.

Cashier: Faculty/unit

Fund: F210 (Operating)

Account: 402030 (Royalties and Rights)

GST: N

Mineral rights

Cashier: Facilities & Operations (Real Estate Office)

Fund: F210 (Operating)

Account: 402030 (Royalties and Rights)

GST: N

Surface rights

External Billing: Facilities & Operations (Real Estate Office)

Fund: F210 (Operating)

Account: 402030 (Royalties and Rights)

GST: N

 UAPPOL:

Patent Policy

 

Links:

Government of Canada – Copyright Regulations

6.   Small Operating Grants (not related to research projects or other restricted funds)
Note: all research grants (regardless of amount) must be sent to RSO for processing.

Units will process student employment grants and other small ($5,000 or less) operating grants as external sales revenue, for the following reasons:

  • small operating grants are immaterial to the university’s financial statements
  • greater efficiency (avoids the administrative costs of additional review and approval by Financial Services)
  • consistency in accounting for small operating grants
  • financial reporting is minimal and in a format specific to the funding program (i.e. cannot be generated by PS Financials)

Small operating grants are processed as follows:

FUND

F210 (Operating)

ACCOUNT

402001 (External Revenue General) 

GST

N

Student Employment Grants (not related to research projects)

a) Student employment grants are funding related to federal and provincial student employment programs such as:

  • Canada Summer Jobs Program
  • Canada-Alberta Job Grant
  • Metis Youth Summer Employment Program

The unit will deposit these grants through Cashier.

b) Alberta Labor - STEP program

HRS coordinates this program on behalf of institution. Under this program the university can apply for funding to offset a portion of a student’s salary. In approximately October HRS will process a billing to Alberta Labor. The amount (revenue or cost recovery) will be coded to the ChartField string where the individual was paid from. The account code used will be 402001 (External Revenue General) for operating funds and 502101 (Supplies & Services General) for the restricted research fund (or any other restricted fund).

RSO has approved that these STEP funds can be coded as cost recovery.

HRS will advise departments of this transaction.

Note: the accounts receivable transaction will against the deptID that received the revenue/cost recovery.

Other Small Operating Grants ($5,000 or less)

Some units receive small non-research grants related to their operations (e.g. Canada Council grants, grants for University of Alberta Press). The unit will deposit these through Cashier if $5,000 or less. If the grant exceeds $5,000, the unit will complete the Cheque Deposit information Form.

Note: An exception to the above is Learning Services (LSE), which can deposit non-research grants up to $10,000 through Cashier, as LSE has numerous small dollar grants for its operations (e.g. University Press).

7.   Sponsorship Revenue

Sponsorship revenue is always from an external source(1) and is processed to the operating fund (F210) as external sales revenue.

Sponsorship is defined in the Sponsorship Procedure as follows:

A non-university entity provides funding to the university and, in return, receives advertising or promotion of its brand, products or services.

Funds provided to the university through sponsorship are not eligible for charitable tax receipts in accordance with Canada Revenue Agency (CRA) regulations and guidelines. A sponsorship is not a donation or grant.

Many units provide opportunities to external organizations to sponsor the following types of events, programs or activities:

  • conferences, symposiums, lectures, theatrical or musical productions
  • fundraising events (e.g. golf tournament)
  • academic journals
  • university-supervised student projects
  • extracurricular student activities, events or programs such as athletic teams, student organizations, field trips or competitions

Sponsorship revenue is classified as operating, as it does not include the characteristics that typically accompany restricted grants and donations. Commensurate with the level of sponsorship and/or whether the organization is contributing toward a specific portion of the event, program or activity, the organization receives the benefits specified in the sponsorship agreement and/or in the sponsorship appeal materials. Refer to Examples of Sponsorship Recognition, Acknowledgment and Promotion below. 

(1) Sponsorship revenue does not include a contribution received from an internal source. Refer to Internal Sales, Internal Cost Recoveries and Transfers for further information.

 

 
UAPPOL:
Sponsorship Procedure

Processing Sponsorship Revenue 

Sponsorship revenue is processed as follows.

SITUATION

PROCESS

General

 

 

 

 

Note: In some cases, where the funding is incidental to an activity that is also funded by a grant (i.e. restricted research fund) and for which a research project has been set up (e.g. conference), the unit may process the sponsorship to the project.

The unit will process the sponsorship revenue as follows:

Fund: F210 (Operating)

Account: 402182 (Sponsorships)

GST: N

Process to be used:

  • External Billing - Usually there is a sponsorship agreement. The unit will bill once the program or event has occurred and/or when the agreed recognition or promotion has been provided.
  • Cashier - Where billing is impractical (e.g. promotional material for program/event indicates amount for various levels of sponsorship and the organization sends payment for the chosen level of sponsorship), the unit will process when the payment is received.

Sponsorship revenue combined with a donation – (rare) - If sponsorship is provided in the form of tangible items (in-kind) valued at ≥$5,000

Note: The university does not record the value of in-kind services as revenue.

The unit will not process the sponsorship revenue through Billing or Cashier.

The unit will forward the payment (if applicable) and sponsorship agreement or other supporting documentation to Office of Advancement. Office of Advancement will process the sponsorship revenue to account 402182.

 

Examples of Sponsorship Recognition, Acknowledgment and Promotion

BENEFIT TO SPONSORING ORGANIZATION

EXAMPLES

Advertising

  • positioning of the sponsoring organization’s logo on the university’s Web site, promotional materials, conference proceedings, on communications for the event or activity, or on signage
  • a leaflet outlining the organization’s profile or inclusion of same on a university Web page, or a link to the sponsor’s Web site
  • materials provided by the sponsor displaying the organization’s logo such as delegate bags, pens, notepads, mugs, etc.
  • space for the sponsor’s own promotional materials and/or signage
  • sponsor table, booth or exhibit at the venue
  • a social event, reception or meal bearing the sponsor’s name

Acknowledgment or recognition by the university

  • expression of thanks in media releases (including social media) and/or presentations (e.g. PowerPoint slide)

Naming rights

  • organization’s name appears on a recurring event, a room, or a facility for a defined period of time

Other benefits

  • free or discounted registration for delegates from the sponsor’s organization, or free meals at the event or free participation in event activities
  • registration list of delegates attending the event
  • opportunity to speak at the event

Appendix 2 – External Cost Recovery Scenarios

Excerpt from earlier section: External Sales and External Cost Recoveries – External Cost Recoveries

“External cost recoveries are difficult to clearly define and are subject to different interpretation both internally and externally.  FS has performed an analysis (that included a review of transactions along with the backup and discussion  with various units) of transactions processed as credits to expense accounts, and has ascertained that the majority of these transactions should be processed as an external sale. In the case of restricted funds (e.g. research) some of this activity was a grant. Both volume and dollar value of these transactions is not significant and the higher volume occurs in the operating funds. In the interests of efficiency, consistency and clarity the university will adopt the following processing requirements for transactions that units may refer to as "recoveries":

  • In the operating funds most “recoveries" will be treated as revenue (sales of products and services - account range 402xxx). Some very specific scenarios will be treated as a credit to an expense account.

  • In the restricted funds (e.g. research) all “recoveries" will be credited to the appropriate expense account. The different treatment in the restricted funds is a result of granting agencies (e.g. NSERC) not allowing other revenues to be processed to the grant project. There is generally low volume.

External cost recoveries are processed when receivable or received.

Note: University business processes are to be used only for University of Alberta activities. Under no circumstances should university business processes or resources be used for non-university related expenses (e.g. employee’s personal expenses in order to obtain preferential pricing, the GST rebate or to use university funds as a loan), even if these are reimbursed to the unit at a later date.

Scenarios

The scenarios listed in the table below indicate when it is appropriate to code credits to expense accounts (cost recoveries), credits to revenue accounts (402xxx) and other accounts.  The inclusion of revenue (sales of services and products) and other accounts will provide a broader understanding of what might be perceived as same or similar transaction and ensure the correct process is used as well as coding accuracy.  If the table of scenarios does not assist you with your specific scenario please send details to:

revenue.procedure@ualberta.ca

Note: RSO or FS process all grant revenue.

For scenarios that allow for the processing of a credit to an expense account, generally the account used will be materials and supplies (502xxx) or travel (5032xx) accounts.  Under no circumstances is it appropriate to code expense recoveries to the following accounts:

  • Salaries (500xxx)
  • Employee Benefits (501xxx)
  • Awards and Bursaries (5001xx) 

Other comments

When to use Cashier versus Billing for external cost recoveries:

When the exact amount is known, and the payment will occur sometime in the future, the unit prepares a PeopleSoft Billing, which records the credit to the expense and the debit to accounts receivable.  The unit may know the amount at:  i) the outset (e.g. an agreed amount), ii) when the event has taken place (e.g. travel claim is completed), or iii) after the event at which point the external organization will advise the amount they will pay.

Cashier is used if the amount is not known until the time the payment is received (external organization calculates and pays for their portion (i.e. the payment is in effect the notification of what they will pay)).

 

ChartField string coding:

When the unit codes to an expense account, the unit uses the same ChartField string as was used on the original transaction (including account). When the unit codes to a revenue account (402xxx) they would use the same ChartField string (excluding account) as the original transaction.

 

For the purposes of the table below please note:

  • Operating funds – all funds excluding restricted funds
    • F330 Research (Operating is an operating fund
    • Restricted funds – all funds starting with “5” and endowment funds (Exxx).
      Note: the term project is used and includes non-project funds (e.g. endowments)
  • Centres and Institutes (C/I)
    Some C/I that are classified as restricted also receive operating funds (e.g. sales), which they are allowed to include in their restricted project. Therefore in some of the scenarios below the C/I would follow the process for operating funds.
    Example: Replacement of dishonored cheque resulting from a cash sale. In this case the C/I would process the same as operating funds. 

 


SCENARIO

FUNDS

PROCESSING UNIT

ACCOUNT CODING

Travel cost sharing


Funding from external source where the unit/project has incurred the travel costs and recovers a portion of the travel expense from an external organization. In certain situations UofA business travel is co-mingled with other academic travel activities (e.g. speaking engagements).

University employees are often invited to speak or present at conferences. These academic obligations include participating in meetings, seminars, workshops and sharing of knowledge. To show its appreciation the hosting organization agrees to cover all or a portion of the travel costs (e.g. airfare and accommodation).

 

 

When an external organization pays a portion of the expense:

Ideally when an external organization has indicated that it will cover a portion of the UofA employee travel expense, the traveler will submit a claim to the other organization for these expenses and exclude these expenses from any claim submitted to the university.  However, it is recognized that this process may not be practical when setting up the trip. Therefore the university will pay the full expense recognizing they will receive a portion of the travel expense from the external organization at a later date.

 

When an external organization pays the full expense:

In cases where all expenses are being  paid for by an external organization – one of the following may be appropriate:

  • it is considered a service provided by the unit and therefore is revenue (402xxx) in the operating funds.
  • it is not considered a service by the unit and therefore the traveler pays for the expense (e.g. personal credit card) and then collect from the external organization
  • it is a research grant

 Notes:

  • Personal travel for a UofA employees may be added to a business trip however, all additional expenses must be paid directly by the employee (e.g. personal credit card)  and excluded from any claim submitted to the university
  •  Travel expenses for a spouse or partner who accompanies UofA employee must be paid directly by the employee (e.g. personal credit card) and excluded from any claim submitted to the university.

Refer to U of A Policies and Procedures On-Line (UAPPOL)

Travel and Expense Procedure

Operating funds

Unit will process via Cashier or Billing to the appropriate external revenue account (402xxx).

 

Restricted funds
Unit will process via Cashier or Billing to the same 5032xx expense account where the expense was processed originally.

 

 

 

 

 

 

 

Hospitality cost sharing

 

A unit may put on an event where the costs will be shared between the university and an external organization (e.g. student group). 

 

Ideally the expenses would be split (and paid for separately) by the two different organizations.  However where this is not practical or possible the university will pay the full expense and will receive a portion of the expense from the external organization at a later date.   

 

Notes:

  • Units must not use the university’s financial system for any expenses that are not in support of a university event.  Examples:  a group (UofA employees) goes for dinner or participates in a golf tournament where the cost of the dinner or golf tournament will be paid for by each individual.  

Refer to U of A Policies and Procedures On-Line (UAPPOL)

Hospitality, Working Sessions/Committee meetings and University Employee Functions Procedure

Operating funds

Unit will process via Cashier or Billing to the appropriate external revenue account (402xxx).

 

Restricted funds

Unit will process via Cashier or Billing to the same expense account where the hospitality expense was processed originally (502167 – Hospitality).

 

Credit  from Vendor

 

Accounts Payable Invoice:

Vendors will usually issue credit invoices for duplicate payments, returned goods or pricing adjustments.  

Refer to U of A Policies and Procedures On-Line (UAPPOL) Payment Procedure (Accounts Payable)

 

Corporate Purchasing Card  (P-Card):

Vendor will usually issue a credit directly to the P-Card for duplicate payments, returned goods or pricing corrections

 

 

Refer to U of A Policies and Procedures On-Line (UAPPOL)

Corporate Purchasing Card Procedure

Operating and restricted funds

For accounts payable credit invoice:

SMS will process all credit invoices (or refunds from vendors) via Accounts Payable to the same 50xxxx expense account where the expense was originally processed.  

 

For PCard credits:

Vendor will process credit to PCard and this will be reflected on the PCard statement.

 

Replacement of dishonored cheque resulting from a cash sale.

 

 

Dishonored cheques are typically due to non-sufficient funds (NSF) or stale dated (cheques older than 6 months) and are returned by the university’s bank to FS - Cashier resulting in a charge to unit’s bad debt expense account 502671. For NSF cheques the amount charged back will include an additional NSF charge-back fee.

 

The unit is responsible for collection of both the replacement funds and associated NSF charge-back fee from the customer.

 

 

 

Refer to U of A Policies and Procedures On-Line (UAPPOL) 

Cash Depositing Procedure.

Operating funds

For replacement of dishonored item and NSF charge-back fee:

Unit will process via Cashier to account 502671 - Bad Debt

 

Restricted funds

Not applicable

Return of a travel advance

 



Refer to U of A Policies and Procedures On-Line (UAPPOL)

Travel Expense Procedure

Operating funds

Unit will process via Cashier to unit level (F210), to account 100701 – Travel Advance.

 

Restricted funds

Not applicable

Vendor rebates

 

Incentive provided by supplier based on purchase thresholds (percentage or amount) within a specified period as defined by the   vendor rebate contract agreement. Payments may be received by:

  • SMS on behalf of the university (e.g. suppliers provides an institutional % rebate on annual purchase volume).
  • Unit (e.g. preferred supplier provides % rebate on units purchase volume based on the preferred supplier contract agreement) (refer to note below).

Note:

Currently there are only a few instances where the vendor sends a rebate cheque directly to the unit, in these cases the unit will process via Cashier as revenue to account 402239 – Rebates and Commissions in the operating fund (F210). SMS anticipates that with the expanded use of Supply Net, price discounts will occur on each transaction versus a combined (institutional) or individual refund cheques at a later date.

 

Refer to U of A Policies and Procedures On-Line (UAPPOL)

Preferred Supplier Agreement Procedure

Operating funds

SMS will process all vendor rebates at the institutional level

See additional processing in the scenario section.

 

Restricted funds

Not applicable

 

 

Cost sharing with or funding from an external organization where the unit has incurred costs such as salaries, benefits and/or other expenses and recovers the agreed or approved amount or % from the other organization.

 

Includes:

  • Secondment of university staff member to a non-University of Alberta organization. Secondment is a temporary move of a University of Alberta employee to an external organization to perform the functions of an existing position or to take on a special project. The employee maintains their position with, and is paid by, the university and the university remains ultimately responsible for obligations related to the employee’s continuing status. The external organization is billed by the university for the agreed amount to cover salary and benefits.
  • Government programs to cover student salaries and benefits. The University is responsible for the payment of salaries and benefits coinciding with the program agreement. The amounts recovered will be recorded as external sales revenue.

Notes:

  • Arrangements such as these for restricted funds (e.g. research) are most likely a grant.
  • In some cases the UofA participates with others (e.g. other Alberta universities) in securing a good or service (e.g. legal advice). In cases such as these it is best if the service provider split the invoice between each of the parties. In cases where this is not possible and the UofA pays, they will collect from the other parties and credit to the expense account where the expense was processed originally.

Operating funds

Unit will process via Cashier or Billing to the appropriate external revenue account (402xxx ).

For secondment: 402012 – Labour Ext or 402014 – Contract Ext.

 

Restricted funds

Not applicable

 

 

Charge to students for travel (e.g. field trips, conferences) arranged on their behalf by the unit.

Operating funds

Unit will process via Cashier to the appropriate revenue account (402xxx ).

 

Restricted funds

Not applicable

Reimbursement by staff for using university resources for personal purposes  (e.g. telephone, photocopy, art supplies).

Operating funds

Unit will process via Cashier to the appropriate revenue account (402xxx).

 

Restricted funds

Not applicable

Fees/price to attend a University of Alberta conference (includes charges where the unit intends only to recover the costs of the conference).

Operating funds

Unit will process via Cashier or Billing

to external revenue account 402025 – Conference Reg Fees Ext

 

Restricted funds

Not applicable

Return of unused petty cash funds

 

Petty cash is charged to the unit’s account 502101 - supplies and services general.

 

Refer to U of A Policies and Procedures On-Line (UAPPOL)

Petty Cash Procedure

Operating and restricted funds

Unit will process via Cashier to the expense account  502101 – Supplies  and Services General

 

 

Return of external sub-grant

 

External sub-grants are processed by RSO only, and therefore any return of sub-grant funding would be returned to RSO.

Operating funds

Not applicable

 

Restricted funds

RSO will process via Cashier or Billing

to account 502601/502602  – External Subgrant Accountable/External Subgrant NonAcntable

Recovery of an amount previously written off as a bad debt expense from an account receivable (GAR customer).

 

Unit will complete the Cheque Deposit Form and send the cheque to FS-Accounts Receivable. FS will reinstate the original invoice. The payment will be applied to Accounts Receivable.

 

Refer to U of A Policies and Procedures On-Line (UAPPOL)

External Billing Procedure

FS will reinstate the original invoice via Billing to the ChartField string where the revenue was originally processed.

 

Recovery of research over expenditure (unauthorized) that has been charged back to the operating budget.

 

Note: If the Principal Investigator is paying back an over expenditure that has not yet been charged back, the funds would be processed by the unit as an expense recovery to an appropriate account.

 

Refer to U of A Policies and Procedures On-Line (UAPPOL)

Research – Over Expenditure (Unauthorized) Procedure

Operating funds

Unit will process via Cashier to account 502672 – Over Expenditure Chargeback.

 

 

Proceeds from sale of surplus equipment

 

Generally proceeds are negligible and are retained at the institutional level to offset the cost of disposal. However, if a unit expects the proceeds to be significant, unit may request sale proceeds to be deposited directly to the unit’s operating account (F210 and account 502681 – Gain (loss) on disposal of assets).

 

Proceeds from the sale of surplus equipment purchased from restricted research funds must be directed back to research.

 

Note: Sales of equipment must be coordinated through Supply Management Services (Surplus Disposal).

 

 

Refer to U of A Policies and Procedures on-Line (UAPPOL) 

Equipment Asset Disposal Procedure –Surplus

SMS will process all equipment surplus sale proceeds at the institutional level.

See additional processing in the scenario section.

 

 

 

Recovery from external insurers of university insurance claims

 

This generally occurs for property claims (e.g. theft, damage) or for fleet vehicles. Insurance and Risk Assessment (I&RA) receives and deposits all insurance claim payments at the institutional level. When the recovery is allocated to a unit, they will process via GLJE User Interface (IRM mask) to the unit.

The account used would be one of the following:

502477 – Self Insured Claim

502481 – Third Party Insurance Recovery

Other – unit may supply another account (e.g. where replacement expense was charged)

I&RA will process all insurance claim payments to the institutional level.

 

When the insurance recovery is allocated to a unit:

I&RA will process via GLJE User Interface (IRM) to the ChartField string that had incurred the expense initially or to the ChartField string that was used to replace the loss.

Refund of expense claim previously reimbursed by the university due to discovery of an error on the original claim such as: 

  • incorrect exchange rate used
    • overpayment of claim
    • paid wrong person
    • same expense claimed more than once
    • expense claimed in error
    • same expense claimed via 2 different processes  (e.g. T & E claim and professional expense reimbursement – PER)
  • personal or ineligible expenses claimed (e.g. corporate p-card  used in error to purchase personal items;  hospitality charges claimed over allowable limit)

The refund of expense claim amounts is evidence the original claim was completed incorrectly.  Every effort should be made to reduce recoveries of this nature through communication of procedures, claim review, and follow-up with the claimant prior to reimbursement.  

 

 

Refer to U of A Policies and Procedures On-Line (UAPPOL)

Travel Expense Procedure, Expense Reimbursement Goods and Services Procedure

Operating and restricted funds

Unit will process via Cashier or Billing to the same 50xxxx expense account to which the expense was processed.

Generally the accounts will be in materials and supplies (502xxx) or travel (5032xx).

 

 

 

 

 

 

  

Last Update: March 2018