Reimbursement or Revenue
The Grey Areas
By Shaun McMullin
Most transactions increasing financial resources within the University are easily categorized and pose no
difficulty in determining the proper accounting treatment. However, certain miscellaneous financial
transactions result in increases cash that may qualify as a reduction of expenditures or as an increase in
revenues.
The default treatment for most cash deposits is as revenue. Deposits against expense are rare because
we are effectively saying by such treatment that the expense being offset should not properly be a
university expense, which violates fiscal rules requiring use of resources only for official state
business.
A. Official Accounting Guidance
1. APS Revenue Definition & Recognition
2. While the following list provides a quick reference, varying circumstances require professional
accounting judgment; therefore please contact Accounting Help at 303-724-9610 to discuss any
cash deposits to expense.
3. The Finance Office will review all cash deposits to expense for proper accounting treatment and
contact departments for clarification and correction.
B. Revenue
Principle: Receipts resulting from selling goods, providing services or reporting research results in
the execution of our mission, which is instruction, research, public service, and patient care. These
are exchange transactions. Beware that the value given by the university in such exchange
transactions may be intangible, such as knowledge benefiting society.
1. Gifts or sponsorships.
2. “Reimbursements” from students. Since students are one of our primary customers, payments
from students are almost always revenue.
3. Proceeds from insurance related to property and casualty losses incurred. Although this receipt
is unrelated to our mission, yet it is revenue because we have the option to not replace the lost
property. Contrast with C-3 below.
4. Sponsor payment to cover IRB fees are payments directly related to our research mission, so they
must be recorded as revenue. The revenue and related expense should usually be recorded on the
grant so they are properly associated with the grant.
5. Payment for “travel costs” by an external entity where the university is rendering services
related to our mission. Agreements by the university may separately list travel costs, but if it is
part of payment for officially rendered university services, then it is revenue. Employees
travelling on official University business should not accept personal payment from another entity
because that contradicts the claim that this is official University business, and it has potential tax
implications.
6. External resale of items purchased internally from a service center (Expense Purpose Code1
(EPC) 2100 such as Printing). For example, a department orders printed materials from Printing
Services and resells the materials to students. Since the materials were purchased from a service
center and therefore no revenue has been recognized for external reporting purpose, the sale to
students should be recorded as revenue. Contrast with C-7 below.
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C. Expense Reduction
Principle: A receipt treated as an expense reduction effectively says that the expense being reduced
was not for official university business. This is not normally allowed, but in the cases below, it may
happen.
1. Refunds or rebates from a vendor for goods or services purchased from the vendor.
2. Reimbursement of personal usage of university resources, such as a photocopier, by employees
when the resources involved are typically not used to provide services on a fee for service basis.
Such usage is normally not allowed, but may happen for insignificant and incidental items.
3. Payment of worker’s compensation claims from an insurance company. In this case this is an
expense reduction because it reduces the cost of lost productivity.
4. Cost-sharing agreements with external entities whereby the university and the external entity
agree to share the expenses of a particular activity that is not related to any mission-related
service provided by the university.
5. Payment by an employee to help defray part of a travel cost. This may be reimbursement of
inadvertently claimed travel expenses or cost sharing by the employee. This treatment is an
admission that University resources were improperly used to arrange and pay for travel.
6. Resale of items purchased internally from a true auxiliary (EPC1 2000 such as Bookstore or
Parking). For example, a department purchases one-day parking passes to resell to patients.
Since Parking is a true auxiliary and therefore revenue has already been recognized for external
reporting, the sale by the department should be credited to expense. Contrast with B-6 above.
7. Reimbursements from employees or students for lost university property.
1
To find the expense purpose code (EPC), go to People Soft Finance > General Ledger > Chart Fields > Program and click on the tab
“Program CU Attributes”. Anyone having Finance System access may look this up for programs in any department.
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