Financial Services

Financial Services

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Internal Cost Recovery

Internal Cost Recovery Flow Chart

Internal Cost Recovery is when one Queen's University department or unit recovers expenses from another Queen's University department or unit.  There is no net impact on the cash flows or net income of the University.

Recording Internal Cost Recoveries

The billing department should maintain records which clearly identify the original payment(s) made on behalf of the internal customer and for which recovery is being made.

The guiding principle should be that the information links the charges to the original payment such that a reviewer (e.g. auditor), would have no difficulty in identifying the original payment(s).  Below are examples of the records that the billing department should maintain for some items that are commonly recovered:

  • salaries and benefits, the name of the individual and the period in which salary was paid
  • long distance telephone charges, the month in which the related invoices were paid by the department
  • photocopying charges ​billed on a recovery basis, the unit charge, the number of copies and the period copiers were supplied - where there are detailed records of customer charges it is acceptable to identify only the month in the description
  • other expense recoveries, the document number of the original payment

The "Recovery" transaction MUST NOT:

  • be recorded in advance of the source transaction (i.e. payment of an invoice)
  • be used to record a transfer of funding (i.e. revenue transfer) to another departmental unit or research project.

Taxes

Internal Cost Recoveries are NOT subject to HST.  However, these charges normally include any taxes net of HST rebate that may have been paid or collected.  For more information on HST go to GST/HST.

Financial Objectives

The prime financial objectives for Internal Cost Recovery are:

  • to record transactions in the correct period, and
  • to maintain financial records which adequately support the legitimacy and appropriateness of the transactions

Examples

1. Fund 10000 Department 11170 is recovering photocopying charges from an Internal Fund 80501 Department 11170

Internal Cost Recovery Debit Credit Example One

2. PPS Fund 10000 Department 44301 is recovering maintenance charges from an Internal Fund 10000 Department 11540

Internal Cost Recovery Debit Credit Example Two

For a complete list of Accounts go to Account ID's