Recording Internal Cost Recovery - New May 1, 2013

Recent discussions held with business officers identified the need for changes to the current internal cost recovery process.   To ensure accurate institutional budget to actual variance reporting, the structure of the internal cost recovery accounts will change.

Definition of Internal Cost Recovery

An internal cost recovery occurs when one Queen’s University unit recovers expenses that were incurred through an external party and then allocated between other Queen’s University departmental units.  In this circumstance, the initial expense would result in a net cash outflow to the University, but the cost recovery would not result in a net impact on the cash flows or net income of the University.

Recording an Internal Cost Recovery

All recoveries from a source within Queen’s University, including ancillaries, are internal cost recoveries.   These recoveries relate to expenses that have been incurred by one unit, to an external party, whereby that unit is now ‘recovering’ part or all of that cost from another unit internal to the University.

The department paying for the expense that was initially recorded because of a transaction with an external party to the University should record the expense to the appropriate expenditure account.  An internal cost recovery account, in the same expense budget node as the original expense, should be used to record the recovery.

Effective May 1, 2013

• Accounts 699001-699066 will be deactivated, EXCEPT 699005 (Grants, Contributions).  There have been numerous business needs identified to keep account 699005 open.  This account is not considered a cost recovery account and will remain open and active under the budget node 699000, which will be renamed ‘BUD-Grants, Contributions’.
• New internal cost recovery accounts will be created within the existing expense budget nodes that may incur recoveries.  All internal cost recovery accounts will start with ‘ICR’, denoting ‘internal cost recovery’. 

Example:

In the above example, all expense accounts in range 606001-606008 will roll up to the budget node 606000.

Examples of internal cost recovery transactions:

Example 1: Fund 10000, Dept. 11170 is recovering printing charges from Fund 80501, Dept. 11170.

	Fund	Department	Account	Amount	Description
Debit:	80501	11170	606001	$1,000	Printing/Photocopying
Credit:	10000	11170	606002	-$1,000	ICR-Printing Services

Example 2:  Fund 10000, Dept. 44301 is recovering maintenance charges from Fund 10000, Dept. 11540.

	Fund	Department	Account	Amount	Description
Debit:	10000	11540	660002	$5,000	Maintenance
Credit:	10000	44301	660019	-$5,000	ICR-Renovations & Alterations

 

New ICR Account Listing and Applicable Budget Node as of May 1, 2013 (187 KB)

Existing Cost Recovery Accounts to be Deactivated May 1, 2013 (180 KB)

Should you have any questions regarding use of internal cost recovery accounts: 

• Contact your Financial Officer/ Business Officer
• Contact Financial Services at financial.reporting@queensu.ca or (613)-533-2050.