The following revenue types require specialized processing.
Auxiliary and self-funded revenues are funds received by the University that are not classified as sponsored project, gift/gift in kind, or fundraising event. All auxiliary and self-funded revenues must be classified as Operating Revenues and must be recorded, under the accrual basis of accounting, when the goods or services are provided.
The campus controllers’ offices are responsible for setting forth procedures for processing auxiliary and self-funded revenue. These procedures, at a minimum, must require that all such revenue be deposited with the University Treasury and accounted for in an appropriate auxiliary/self-funded Fund.
Revenues raised through campus-sponsored fundraisingmust be processed in accordance with procedures for gift revenues and gift in kind transactions.
Gift revenues are classified as Nonoperating Revenues and must be recorded under the accrual basis of accounting as prescribed by GASB No. 33.
All gift revenues must be processed according to the Finance Procedural Statement Gift Revenues. All gifts in kind must be processed according to the Finance Procedural Statement Gift in Kind.
All sponsored project revenues must be processed through the campus sponsored project office, deposited with the University Treasury, and accounted for in the sponsored projects restricted Fund.
Sponsored project revenues arise from sponsored project awards from an external sponsor who both restricts the use of funds or property and stipulates conditions with which the University must comply.
Organizational units should forward awards to their campus sponsored project office for determination as to whether or not the award is a sponsored project. The campus sponsored project office makes the determination using the criteria outlined in this procedural statement and consulting with the supporting foundation, as necessary.
The following considerations are typical of sponsored projects:
The revenue recognition of sponsored projects is dependent on several variables and requires individual analysis in order to make certain key determinations. The Analysis of Sponsored Project Revenues offers guidelines for deciding how these transactions should be reported on the University’s financial statements. The Analysis is composed of four steps:
This step focuses on what type of reporting is mandated, what the exchange is, who the owner is, and who receives the benefit. At the University, the latter characteristic is particularly crucial in determining how to classify fellowships.
Exchange transactions occur when each party gives and receives essentially equal values. An example is when the University receives funding to develop a computer module.
Exchange-like transactions are similar because the parties can give or receive value, but it may not be equal, or the direct benefit of the exchange is not exclusive to the parties. For example, the University may receive a grant or contract to provide training for nurses.
Nonexchange transactions occur when the University receives value without directly giving equal value in return. The most common example of a nonexchange transaction is not a sponsored project, but a gift.
This step evaluates the impact that eligibility requirements have on the timing of revenue recognition for each type of transaction.
Until the eligibility requirements are met, the sponsor does not have a liability, the recipient does not have a receivable, and the recognition of expenses or revenues for resources transmitted in advance should be deferred. There are three eligibility requirements, which, if applicable, must be met before revenue can be recognized:
This step evaluates whether or not the transaction is mission related.
Once the revenue can be recognized, the next step is to determine if it is Operating Revenue or Nonoperating Revenue:
The step considers eligibility requirements and purpose restrictions as they affect the classification of net assets (if any result from the sponsored project):
Unless approved by the Assistant Vice President/University Controller, there are no exceptions to these procedures.
Questions about the classification of revenue, or which Fund to use for a transaction, should be directed to the appropriate campus finance office.