University of Saskatchewan

Financial Services Division (FSD)

Guidelines & Procedures

Revenue Recognition Policy Guidelines

I. Purpose:

In support of the Revenue Recognition Policy this guideline relates to the appropriate accounting of revenue from various sources for restricted and unrestricted purposes in accordance with the Restricted Fund Method of Accounting [Canadian Institute of Chartered Accountants (CICA) Handbook (HB) 4410.57-.77].

The Revenue Recognition Policy addresses external revenue transactions between the University of Saskatchewan and non-University entities (Note that Chart 2 entities as recorded in Unifi are considered non-University entities.). Revenue transactions between University entities (i.e. between colleges and units) should be recorded as internal cost recoveries.

Three overarching issues will be addressed:

  1. Identification of external revenue restrictions:
    • Whether the revenue to be recorded is classified as restricted purpose or unrestricted purpose.
  2. Where to record revenue (fund classification):
    • Whether the revenue is recorded in a restricted or unrestricted fund.
  3. When to record revenue:
    • When does the University have the obligation to record the revenue?

II. Responsibilities:

Financial Services Division is responsible for recording revenue and setting up accounts receivable for grant and contract revenue transactions in the Student Financial Aid, Research and Capital Restricted Funds.

Financial Services Division is responsible for recording investment income and setting up accounts receivable for any funds which are invested by the University either self-managed or as part of the University investment pool.

Corporate Administration is responsible for recording real estate income and setting up accounts receivable for University properties under its administration.

Colleges and units are responsible for recording revenue, setting up accounts receivable and recording deferred revenue in the General Fund (see definition below) for activity managed at the college or unit level.

III. Definitions:

Contract - a reciprocal agreement between two or more parties creating enforceable obligations. The University of Saskatchewan requires that the agreement be in writing, signed by the duly authorized University personnel in accordance with the University Signing Authority Policy. Common features of most contracts:

Contribution - a non-reciprocal transfer to a not-for-profit organization of cash or other assets or a non-reciprocal settlement or cancellation of its liabilities.  Government funding provided to a not-for-profit organization is considered to be a contribution [CICA HB 4420.02 (b)]. Examples include grants, gifts and bequests but do not include sales of services or product to government.

Contribution Receivable - should be recognized as an asset when it meets the following criteria:

  1. The amount to be received can be reasonably estimated; and
  2. Ultimate collection is reasonably assured. [CICA HB 4420.03] 

For purposes of revenue recognition, contributions include contributions receivable.

The University has determined that one of the critical elements to meeting the contribution receivable criteria is the existence of a formal agreement, evidenced by signed documentation, regarding the contribution. Signed documentation is evidence of both parties formal commitment to the specific nature and terms of the agreed-upon arrangement.

Endowment Contribution - is a type of restricted contribution subject to externally imposed stipulations specifying that the resources contributed be maintained permanently, although the constituent assets may change from time to time.

Endowment Fund - a self-balancing set of accounts which report the accumulation of endowment contributions. Only endowment contributions and investment income subject to restrictions stipulating that it be added to the principal amount of the endowment fund would be reported as revenue of the endowment fund. Allocations of resources to the endowment fund that result from the imposition of internal restrictions are recorded as interfund transfers.  [CICA HB 4410.02 (e)(ii)]

Fund - a self balancing set of accounts recording cash and other financial resources, together with all related liabilities and residual equities or balances, and changes therein, which are segregated for the purpose of carrying on specific activities or attaining certain objectives in accordance with special regulations, restrictions, or limitations.

General Fund - a self-balancing set of accounts which reports all unrestricted revenue and restricted contributions for which no corresponding restricted fund is presented. The fund balance represents net assets that are not subject to externally imposed restrictions. [CICA HB 4420.02 (e)(iii)] 

For the University of Saskatchewan, the General Fund encompasses all Operating Funds and Ancillary Funds. 

Grant - financial support for a particular subject area or field without formal detailed stipulations. Consistent with characteristics identified in policies and guidelines developed by Research Services, http://www.usask.ca/research/research_services/policies.php , the following are often present in a grant:

Investment Income - revenue arising from the use by others of University assets including, but not exclusive to, the following categories:

Investment income will be considered to be restricted or unrestricted based on the restrictions imposed on the resources originally contributed.

Real Estate Income - income generated from real estate, such as lease or rent payments 

Restricted Contribution - a contribution subject to externally imposed stipulations that specify the purpose for which the contributed asset is to be used. A contribution restricted for the purchase of a capital asset or a contribution of the capital asset itself is a type of restricted contribution. [CICA HB 4410.02(b)(i)]

Restricted Fund - a self-balancing set of accounts the elements of which are restricted or relate to the use of restricted resources. Only restricted contributions, other than endowment contributions, and other externally restricted revenue would be reported as revenue in a restricted fund. Allocations of resources that result from the imposition of internal restrictions are recorded as interfund transfers to the restricted fund. [CICA HB 4420.02 (e)(i)]. 

The University of Saskatchewan utilizes three types of restricted funds: Student Financial Aid, Research and Capital.

Sale of Services or Products - any sale of a good or service to parties external to the University.  

Student Fees - tuition and fees as defined in University Policy 4.33 "Tuition and Fees Authorization".

Unrestricted Revenue - neither restricted nor endowed; available for general use 

IV. Major Sources of Revenue and Normal Categorization:

Revenue Restricted Unrestricted
Student fees
 
x
Sales of services and products
x
Grants
x
 
Contracts
x
x
Gifts and bequests (including gift-in-kind)
x
x
Income from investments
x
x
Real estate income
x
x
Miscellaneous income
x
x

The three overarching issues discussed in the "Purpose" section should be addressed as follows:

A. Identification of Type of Revenue:

B. Where to Record Revenue (Fund Classification):

Application:

[See "Decision Tree Illustration for Organizations" below]:

CICA HB 4410.80 Decision Tree Illustration for Organizations, such as the University of Saskatchewan, using the Restricted Fund Method:

Revenue Recognition Decision chart

 

C. When to Record Revenue:


 [See tables below:   "Recognition of Unrestricted Revenue Sources" and "Recognition of Restricted Revenue Sources"]:

Recognition of Unrestricted Revenue Sources:

 

Type of Unrestricted Revenue

 

Timing of Recognition

CICA Handbook Reference

Student Fees

(type of sales and service)

  record as revenue in the year courses and seminars are held

  defer revenue if for future period course or seminar

  prorate revenue if course or seminar spans the fiscal year-end

3400.06 -.07

Sales of Services and Products

  record as revenue when product sold or service provided (set up accounts receivable, if payment not received)

  defer deposits on sale until transfer of risks and rewards of ownership

3400.06 -.08

 

Contracts

  record revenue as the service or contract activity is performed

  ensure enforceable obligations have been met

3400.13-.15

Gifts and Bequests

(including gift-in-kind)

record as revenue in period funds received or receivable

pledges are not recorded until received

4410.68

Income from Investments

  record as revenue when reasonable assurance exists regarding measurement and collectability

3400.09

4410.49 -.51

 

Real Estate Income

  record as revenue in period funds earned (set up accounts receivable, if not received)

3065

Miscellaneous Income

  record as revenue in period funds earned (set up accounts receivable, if not received)

1000.47


Student Fees (Unrestricted):

Sales of Services and Products (Unrestricted):

Contracts (Unrestricted):

Gifts & Bequests (Unrestricted):

Investment Income (Unrestricted):

Real Estate Income (Unrestricted):

Miscellaneous Income (Unrestricted):

 

Recognition of Restricted Revenue Sources:

 

Type of Restricted Revenue

 

Timing of Recognition

CICA Handbook Reference

Grants, with a corresponding restricted fund (i.e. for research, student financial aid, capital)

 

record as revenue upon receipt of signed documentation (set up accounts receivable, if funding not received)

consider implications of multi-year agreements (see below)

4410.62

4420.03

Grants, without a corresponding restricted fund

record as revenue upon receipt of signed documentation (set up accounts receivable, if funding not received)

consider implications of multi-year agreements (see below)

defer revenue if for future period expenses

 

4410.65

4420.03

Contracts, with a corresponding restricted fund (i.e. for research, student financial aid, capital)

record revenue as the service or contract activity is performed (set up accounts receivable, if payment not received)

ensure enforceable obligations have been met

3400.13-.15

Contracts, without a corresponding restricted fund

record revenue as the service or contract activity is performed (set up accounts receivable, if payment not received)

ensure enforceable obligations have been met

defer revenue if for future period expenses

 

3400.13-.15

Gifts and bequests (including gift-in-kind), with a corresponding restricted fund (i.e. for research, student financial aid, capital, endowment)

record as revenue in period funds received or receivable

pledges are not recorded until received

4410.68

Gifts and bequests 

(including gift-in-kind), without a corresponding restricted fund

record as revenue in period funds received or receivable

pledges are not recorded until received

defer revenue if for specific expenses that have not yet been incurred

4410.65

Income from investments, with a corresponding restricted fund (i.e. for research, student financial aid, capital)

record as revenue when reasonable assurance exists regarding measurement and collectability

3400.09

4410.49 -.51

 

Income from investments, without a corresponding restricted fund

record as revenue when reasonable assurance exists regarding measurement and collectability 

defer revenue if for specific expenses that have not yet been incurred

3400.09

4410.49 -.51

 

Real estate income, with a corresponding restricted fund (i.e. for research, student financial aid, capital)

record as revenue in period earned (set up accounts receivable, if not received)

 

3065

Real estate income, without a corresponding restricted fund

record as revenue in period earned (set up accounts receivable, if not received)

defer revenue if for specific expenses that have not yet been incurred

3065

Miscellaneous income, with a corresponding restricted fund (i.e. for research, student financial aid, capital)

record as revenue in period funds earned (set up accounts receivable, if not received)

 

4410.57

Miscellaneous income, without a corresponding restricted fund

record as revenue in period funds earned (set up accounts receivable, if not received)

defer revenue if for specific expenses that have not yet been incurred

4410.57

Grants (Corresponding Restricted Fund):


Grants (No Corresponding Restricted Fund):

Contracts (Corresponding Restricted Fund):


Contracts (No Corresponding Restricted Fund):

Gifts and Bequests (Corresponding Restricted Fund):

Gifts and Bequests (No Corresponding Restricted Fund):


Investment Income (Corresponding Restricted Fund):


Investment Income (No Corresponding Restricted Fund):

Real Estate Income (Corresponding Restricted Fund):

Real Estate Income (No Corresponding Restricted Fund):


Miscellaneous Income (Corresponding Restricted Fund):


Miscellaneous Income (No Corresponding Restricted Fund):