I.    General Comments:

The purpose of these guidelines is to define when a transaction is recorded as either revenue or credit expenditure.

 

II.   Definitions:

Revenue is the income a division earns from a transaction such as the delivering or producing of goods, the reimbursement of costs from a third party, or the rendering of services from the result of other activities that constitute the organization’s ongoing major or central mission.

Revenue is recorded when (1) the earning process is complete (e.g., service is rendered) or (2) an exchange transaction has taken place (e.g., product is delivered).   Examples of the different types of revenues recorded are:
 

A.  Product and Service Sales:

1. Revenues associated with the sale of products such as scientific models, software, data tapes, and other sales of items produced by science or facility programs.
   
2. Revenues associated with the sale of services rendered by UCAR, NCAR or UOP programs. Examples are special function catering reimbursements, membership fees, seminar/conference fees, and cafeteria sales.

B.  Contract Revenues:  Revenue earned through the performance of contractual activity.  Examples are cost reimbursable or firm fixed price contracts and purchase orders, journal editorships, grants, and cooperative agreements.

C.  Internal Chargebacks:  Revenue from the authorization by internal groups to utilize the organizations service centers or facilities.  Examples are Cafeteria, Image and Design Center, and Machine Shop.    

D.  Facility Use:  Revenues generated from use of EOL and CISL facilities by external or internal users.  This includes EOL Systems User Rates, Systems maintenance rates (e.g., Aircraft Maintenance Rate), CISL GAU (General Accounting Unit) Rate, and CSC (Computer Service Center) rates.  All GAU and SUR charges are treated similarly to program income, i.e., the division seeks NSF approval before spending the revenue generated.

E.  Program Income:  Program income is the earning of revenue on a federally sponsored agreement including but not limited to, income from fees for services performed, the use or rental of real or personal property acquired under federally funded projects, the sales of commodities or items fabricated under an award, license fees and royalties on patents and copyrights.  A program may earn program income in any of the revenue categories listed above.  When program income is earned, the revenue must be credited to the agreement that earned the revenue unless otherwise stated in the agreement.  OMB Circular A-110 provides guidance on accounting for the income in Subpart C_.24.  Labs/divisions/programs who have questions about whether their income would be defined as program income should consult their Division Accountant.   

Credit Expenditure is a credit that can be directly traced to a specific expenditure from the same vendor and does not qualify as revenue listed above. The credit should be applied to the program that originally incurred the expense. Examples are returns, rebates, and discounts given on purchased goods and services.

 

III.   Revenue or Expenditure Credit Recognition:

Contract revenues are earned after expenditures are incurred for a respective agreement. The recognition entry to record the revenue occurs during the month end processing. 

Internal chargeback and facility use revenues are recognized when the charge to the user program is recorded, which generally is done on a monthly basis.

External product, service, and facility use revenues are recognized after the product is shipped or the customer has received service. The revenue is recorded when the invoice is sent to the customer requesting payment. Examples include, but not limited to, NCAR Graphics, data tapes, and event services.

Conference/workshop registration fee revenue is recognized when an invoice is sent to the customer or when the cash is received with no invoice.

Expenditure credits are recognized upon receipt of the cash or the applicable credit taken on a vendor invoice.

 

IV.   Bad Debt and Uncollected Invoices:

Bad debt occurs when any portion of the recorded revenue is not collected and it is reasonably probable that it will not be collected.

Non-Federal Programs: the revenue entry is reversed in the program in which it was originally recorded.

Federal Programs: OMB Circular A-122 Attachment B 5 bad debts states "bad debts, including losses (whether actual or estimated) arising from uncollectible accounts and other claims, related collection costs, and related legal costs are unallowable". Therefore, the uncollected revenue must be charged to a non-federally sponsored program.

 

Issued:  November 1999; Revised September 2007