Overview of University Revenues

In this section:

Overview of University Revenues
Sales of Services and Products
Non-Credit Fees
Grants
Donations (Non-Endowed)
Credit Tuition and Fees
Investment Revenue
Summary – What To Do When a Cheque is Received
Appendix – Is Revenue a Grant, Donation or External Sale?


Overview of University Revenues


For all sources of revenue, the following applies: 

1.  Only revenue to which the university is legally entitled is accepted and deposited to university bank accounts and administered through the university financial system.

2.  All university revenue must be deposited to university bank accounts and accounted for within the university financial system.

3.  The university uses the accrual basis of accounting, which involves recording revenue when it is earned (e.g. when the service or product has been provided) regardless of when payment is received.

Accrual accounting also involves deferring revenue when appropriate. At the unit level, external sales revenue may be deferred where payment has been received but the related services and products have not yet been provided. At the institutional level in the university’s financial statements, restricted grants and donations and investment revenue from restricted donations are deferred until the terms are met.

4.  Only Financial Services (FS) and the Research Services Office (RSO) can process grant revenue. Grant revenue is processed through billings to sponsors to create accounting entries for revenue and accounts receivable. Therefore, units must:  

  • immediately forward correspondence from sponsors to RSO (research grants) or to FS (operating grants)                                          
  • inform the sponsor that all payments are to be sent to Financial Services – Accounts Receivable.

5.  Only the Office of Advancement (OA) can process donation revenue. Units must immediately forward donations to OA.

6.  All external sales revenue and external cost recoveries are processed through PS Billing (External Billing) or Cashier (Cash Sales).

Cash Sales are typically high volume, low value transactions where the customer is physically present when paying for goods and services received (e.g. Point of Sale (POS)). Cash sales also include WEB based payments.  In such cases the preparation of an external billing invoice would not make sense.

External Billings typically occur when the unit has agreed to receive payment after the goods and/or services have been provided to an external customer. In such cases an external billing invoice must be generated.  External Billing transactions are typically higher value transactions involving customers who are neither staff nor students.  

 

External Billing must be used to process sales and cost 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.

 

7.  All internal sales revenue and internal cost recoveries are processed through GLJE user interface.

Units sometimes receive cheques for grants and donations and must be able to accurately identify the source of revenue to ensure it is processed by the appropriate unit and accounted for correctly for reporting purposes. It is important for units to understand the distinction between these revenues as external organizations may describe the payments they make to the university differently. The Appendix at the end of this section will assist with identifying whether revenue is a grant, donation or external sale. The unit should contact the faculty’s Senior Financial Officer (SFO) if it still cannot determine the revenue source after applying the criteria.

The following summarizes revenue coding and processing requirements.

REVENUE SOURCE

ACCOUNTS AND

FUNDS (1, 2, 3)

TIMING OF PROCESSING

PROCESSED BY

External sales

Accounts: 402xxx

Fund: Operating

 

As soon as services and products have been provided

Units, via:

  • entry into External Billing
  • user interface to External Billing
  • Cashier

Internal sales

Accounts: 401xxx

Fund: Operating

As soon as services and products have been provided

Units, via GLJE user interface or GLJE request

Non-credit fees

Accounts: 4031x

Fund: Operating

 

When received or assessed

Units, via:

  • Cashier
  • Campus Solutions (SAS) - Faculty of Extension

Grants

Accounts: 405xxx-499xxx

When receivable (e.g. when the award letter is received or start date of award)

 

 

Operating

Fund: Operating

FS, via External Billing

 

Capital

Fund: Restricted

FS, via External Billing

 

Research

Fund: Restricted

RSO, via External Billing & Cashier

Donations (non-endowed)

Accounts: 405xxx-499xxx

Funds: Operating, Restricted

When received

OA, via GLJE user interface (DON)

Credit tuition and fees

Accounts: 4030xx

Fund: Operating

When assessed

Office of the Registrar via Campus Solutions (SAS) (FEE) (4)

 

Investment revenue (including endowment spending allocation)

Accounts: 404xxx

Funds: Operating, Restricted

Allocated at beginning of year

FS, via GLJE user interface (END, INT)

Notes:

(1)  Operating funds: includes F210 (Operating), F310 (Ancillary Enterprises), F330 (Research – Operating) and, for the purpose of these guidelines, also includes F551 (e.g. AARP grants), F552 (Student Awards & Bursaries). Some F330 projects may have infrequent, low value grants or donations during the life of the project that are deposited to the project by the unit to the appropriate 405xxx-499xxx account (e.g. a conference for which registration fees are collected may also receive a grant from an external sponsor).

(2)   Restricted funds: includes F530 (Research), other restricted funds (in rare cases, subject to approval).
Note:

  • There are certain approved exceptions where units are allowed to commingle revenue sources (e.g. record external sales revenue to 402xxx accounts in F530). This includes units funded from both restricted and operating (e.g. centres, institutes).
  • The university has a restricted special purpose fund which is used for grants and donations greater than $1 million. All other restricted grants of $1 million or less are classified as research.
    • Pursuant to approval by RSO, a restricted research project funded by grant revenue may, throughout the life of the project, include a small amount of ad hoc sales revenue.

(3)  An exception to the processing of operating grant revenue by FS is permitted for student employment grants and other small operating grants ($5,000 or less). Refer to Appendix 1 of the External Sales and External Cost Recoveries section of this chapter.

(4)   Some faculties’ process fee revenue related to credit courses (e.g. mandatory instructional support fee).  For additional information refer to UAPPOL, Student Instructional Support Fees Procedure.

 

Sales of Services and Products

External Sales (402xxx account range)

Selling units process 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 as external sales to F210.

The following information is provided in addition to that in the Overview:

  • Units should ensure that their prices cover the full cost (both direct and indirect costs) of providing the services and products.
  • 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.
  • External restrictions cannot be imposed on sales revenue.
  • The university has established procedures for the recognition of external cost recoveries dependent on the fund type (refer to External Cost Recoveries in the External Sales and External Cost Recoveries section of this chapter).
    • Where the sales revenue is received or billed in advance of providing the service or product, it may need to be deferred and recognized as revenue at a later date when the product or service is provided (refer to Deferred Revenue in the External Sales and External Cost Recoveries section of this chapter).

For additional information, refer to the External Sales and External Cost Recoveries section of this chapter.

Internal Sales (401xxx account range)

Selling units process internal sales.

Internal sales include revenue from fee-for-services activities and from the sale of products to other University of Alberta units in exchange for the fee/price determined by the selling unit. Internal sales are recorded when the product or service has been provided.

The following information is provided in addition to that in the Overview:

  • The selling unit processes the internal sale transaction, generally through a GLJE user interface that has been set up for the selling unit. Units without a GLJE user interface may have ad hoc sales, which are processed by Financial Services through GLJE requests.
  • Units with regular selling activity will use a detailed 401xxx account, or request a new account if an appropriate detailed account is not available. Account 401001 – Internal Revenue General may be used by units with ad hoc sales or very low volume selling activity.
  • Internal sales cannot be accrued or deferred, as the university records accruals and deferrals only for external receivables (assets) and payables (liabilities).

For additional information, refer to the Internal Sales and Internal Cost Recoveries section of this chapter.

Non-Credit Fees (4031xx account range)

Units process non-credit fees.

Non‐credit fees include fees for courses, registration and other fees related to non‐credit programs (i.e. those not described in Credit Tuition and Fees below). Various accounts in the 4031xx account range have been set up for non-credit fees.

Where the fee revenue is received or billed in advance of the program, it may need to be deferred and recognized as revenue at a later date when the program is completed (refer to Deferred Revenue in the External Sales section of this chapter).

Grants

FS and RSO process all grant revenue.

A grant is funding provided to the university by a government entity or other external organization for operating or restricted purposes. Restricted grants have restrictions related to specific capital projects, research projects or other purposes.

Donations (Non-Endowed)

OA processes all donation revenue.

A donation is a voluntary and irrevocable transfer of property (including cash, securities, life insurance interest, art or real property) to the university in return for which no valuable benefit flows to the donor.

The following information is provided in addition to that in the Overview: 

  • OA will issue the appropriate receipt. As a Canadian registered charity, the university may issue charitable receipts (official tax receipts) for donations depending upon eligibility. In some cases, the university may alternatively issue a business receipt.
  • Donations can be for operating or restricted purposes. Operating donations include those designated to the university, a faculty, department or other unit with no other restrictions.

Restricted donations can be spent only in accordance with donor terms, and are generally made for restricted research or capital projects, or for student awards and bursaries. Most restricted donations will have a start- and end-date. Some restricted donations are recurring in nature (e.g. annual student award).

Note: The University’s Advancement Fund Raising Report is based on counting guidelines outlined by the Council for the Advancement and Support of Education (CASE).  Also refer to UAPPOL – Counting Practices for Philanthropic Support Procedure.  These allow for the counting of certain grants and sponsorship (which is an external sale) when reporting on fundraising achievement.

Also note: Grants are only processed by central services units (FS and RSO) and external sales of services and products (sponsorship) is processed by units and coded to revenue account 402182.  They are not processed through the Office of Advancement.

Refer to the Donations section of this chapter for further information on donations.

Donations (Endowed)

Refer to Guide Chapter 10 (Fund Management – Endowment Funds).

Credit Tuition and Fees

The Office of the Registrar processes all credit tuition and fees.
Note: some faculties’ process fee revenue related to credit courses (e.g. mandatory instructional support fee).  For additional information refer to UAPPOL, Student Instructional Support Fees Procedure.

Credit tuition and fees require approval by the Board of Governors and include (excerpt from Student Instructional Support Fees Procedure):

  • instructional fees for supplies, equipment, materials and services directly related to the delivery of instruction in a course or program defined by the Alberta Advanced Education Tuition Fees Policy
    • mandatory instructional support fees assessed in anticipation of costs for supplies, equipment, materials, or services which are not directly related to the delivery of instruction in a course or program, but are considered required elements of a course or program (e.g. field trips).

All credit course tuition and fees are operating revenue. Some units will see this revenue in their financial reports.

Investment Revenue

FS processes all investment revenue.

Both restricted funds and operating funds have investment revenue:

  • Units will see the endowment spending allocation in their financial reports.
    • The majority of all other investment revenue is operating. Some restricted projects may receive interest income due to contractual obligations.

Summary – What To Do When a Cheque is Received

The following summarizes the action to be taken by units when they receive cheques:

REVENUE SOURCE

SEND TO

FORM

Donations

Office of Advancement

Donation Deposit/Pledge Transmittal Form

Grants

Faculty Office

Cheque Deposit Information Form

Cash Sales

Cashier (units with deposit books)

Deposit Form

Financial Services – Accounts Receivable (units without deposit books)

Cheque Deposit Information Form

Faculty of Medicine & Dentistry Office

(units without deposit books)

Cheque Deposit Information Form

Various Other:

  • payments for external billing invoices (i.e. accounts receivable)
  • bad debt recovery
  • student award payment from external organization that specifies the recipient
  • student employment grants
  • any other not listed above

Financial Services – Accounts Receivable

Faculty of Medicine & Dentistry

Cheque Deposit Information Form

Appendix – Is Revenue a Grant, Donation or External Sale?

The following descriptions illustrate the difference between grants, donations and sales. A decision tree is also provided below with additional information as to the distinguishing criteria.

SOURCE

DESCRIPTION

Grant

Funding provided to the university by a government entity or other external organization for operating or restricted purposes. Restricted grants generally have restrictions related to specific capital projects, research projects or other purposes.

Donation (non-endowed)

A voluntary and irrevocable transfer of property (including cash, securities, life insurance interest, art or real property) to the university in return for which no valuable benefit flows to the donor. Donations generally have restrictions imposed by the donor.

External sale

Includes:

  • 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 as external sales to F210.

External sales are recorded 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.

Internal sale

Includes revenue from fee-for-services activities and from the sale of products to other University of Alberta units in exchange for the fee/price determined by the selling unit. Internal sales are recorded as soon as the service or product has been provided.

Note: Generally, an external sale is processed (i.e. a receivable or cash deposit) after the product or service has been provided, while a grant is generally processed before the activity being funded is undertaken (i.e. usually when the award notification is received).


Decision Tree: Is Revenue a Grant, Donation or External Sale?




 

Last Updated: March 2016