University College Cork
Key differences between HEA funding statement accounting policies and
GAAP accounting policies
The accounting policies used in preparing the HEA Funding Statement Financial Statements are the
accounting policies adopted by the seven Irish Universities. These accounting policies are
significantly different from the accounting policies adopted under GAAP. The key differences
between both formats are as follows:
Student Fee Income
In the HEA Funding Statement a portion of the student fee income is deducted from fee income and
transferred to fund capital projects. In addition an element of the fee income relating to non-EU
student fees, in excess of the EU fee level, is shown as other income while the balance is transferred
to faculty development accounts held in the balance sheet. This is not allowed under GAAP
accounting where total fee income must be reported in the Income and Expenditure account.
Research Income
In the HEA Funding Statement Research Income includes expenditure on fixed assets. In the GAAP
Financial Statements such expenditure is excluded. The expenditure is capitalised and depreciated
with a matching credit for grant amortisation.
Research Overhead Income received is disclosed as Other Income in the HEA Funding Statement. In
the GAAP financial statements this income is reported as Research Income
Recurrent Funding Transferred to Capital Projects
Recurrent funding used to fund equipment and capital project expenditure is charged to the Income
and Expenditure Account and credited to a capital reserve account in the Balance Sheet in the HEA
Funding Statement. Such a charge is not permitted under GAAP.
Movement in net under-spends on Departmental Budgets
An accrual/prepayment is made for the unspent/overspent portion of academic and certain
academic and other services departmental consumables and equipment budget allocations i.e. the
University recognised the internal indebtedness to the department on the basis that a budget
allocation had been made to the department in the HEA Funding Statement. Under GAAP accounting
this accrual/prepayment is not allowed as there is no actual liability to an external party.
Internal Interest
The University charges itself internal interest for the use of certain funds. This internal interest is not
allowed under GAAP accounting.
Depreciation & Capital Grant Amortisation
Fixed assets are depreciated over the course of their useful lives i.e. the cost of the asset is spread
over a number of years. Similarly funding received/receivable in respect of these assets is credited to
the financial statements over the same period. The manner in which these capital receipts are
recognised and released to the income and expenditure account results in the different amortisation
amounts in both account formats.
In HEA Funding Statement the grant amortisation credit is the same as the depreciation charge.
Under GAAP only funds received/receivable specifically for the purpose of funding fixed asset can be
amortised. Where a fixed asset is not funded or not fully funded, under GAAP, the grant
amortisation credit will be less that the depreciation charge.
Expenditure charged to Development Fund Accounts
Charging expenditure to development fund accounts in the balance sheet is not permitted under
GAAP accounting. This expenditure is charged to the Income and Expenditure Account in the GAAP
Financial Statements.
Grossing up of Income & Expenditure
In the HEA Funding Statement certain income streams are offset against expenditure. In the GAAP
financial statements this income is shown as income and the related expenditure is shown gross.
Presentation
Certain items are disclosed differently in both formats of accounts. For example the net income and
expenditure of certain subsidiary undertakings are shown as Ancillary Services in the HEA Funding
Statement while the gross income and expenditure are disclosed in the GAAP financial statements.