Financial Services

Financial Services

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Revenue and Cost Recoveries

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Type of Transaction

The Importance of Distinguishing Between Internal and External Transactions

All transactions, regardless of whether they are considered "internal" or "external", must comply with certain financial management objectives (e.g. timely recording of transactions and adequate supporting documentation).

The ability to track and report on "external" financial transactions separately from those considered "internal" is important for:

University external financial reporting, so that:

  • revenues and expenses are not overstated due to the inclusion of "internal" financial transactions
  • the Queen's annual financial statements are prepared in accordance with Canadian Generally Accepted Accounting Principles (GAAP)

Faculties and departments, so that:

  • analysis can be done to assess how much of the reported revenue is being generated from increased cash flows versus the "reallocation" of existing cash flows among internal units.

Diagram displaying the difference between internal and external transactions, for more information please contact the department.

 

 

Internal Transactions

An internal transaction has NO cash implications for Queen's, (i.e. no cash is deposited, and no accounts receivable or accounts payable is recorded). Usually a journal entry is required.

Internal Sales

Only ancillary operations (fund 20000) should record internal sales.

The sale of a good or service from an Ancillary Operation to a Queen's University department or unit where the price of the good or service includes a "mark-up" which provides for a recovery of other indirect costs incurred. There is no net impact on the cash flows or net income of the university.

Diagram displaying an "ancillary operation within Queen's" selling goods or services to "Department A within Queen's"

 

Internal Cost Recovery

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.

Diagram demonstrating "Department B within Queen's" recovering charges from "Department A within Queen's"

 

Revenue Transfers

Revenue transfers are transactions that reallocate funds from one unit within Queen's to another unit within Queen's. Similar to internal sales or internal cost recoveries, there is no net impact on the cash flows or net income of the university.

Diagram displaying "Department A wtihin Queen's" transfering revenue to "Department B within Queen's"

 

External Transactions

An External Revenue or External Recovery Transaction will have net cash implications to Queen's University. The transaction will eventually result in cash being deposited to University bank accounts.  The transactions include income generating activity resulting in cash received or to be received by Queen's as a result of negotiated agreements with organizations, agencies, corporations, and/or individuals considered external to the University in exchange for goods and/or services provided by Queen's staff or departments, or in support of ongoing University activities.

External Revenue

​External Revenue for Queen's are generated through funds received by departments from external sources in exchange for goods and services provided by departments, non-credit student fees, and miscellaneous fees, rentals, etc.

 

External Revenue Flow Chart

 

External Cost Recovery

An External Cost Recovery is when an initial expense is first incurred through an external party and then recovered partially or in full from an external source.

External Cost Recovery Flow Chart