Contract Type Changes for Deferred Revenue

In the October Controller's Office Newsletter, we announced changes to the contracts and grants deferred revenue process.  As a reminder, following are the key points:

  • Deferred Revenue: This currently available contract type recognizes revenue when a schedule for revenue milestones based on technical or scientific accomplishments is included in the award agreement. The Deferred Revenue contract type defers the entire payment or installment until the milestone has been met. These deferrals are apparent in the MyReports Sponsored Awards Summary Report (job aid) where payments are higher than revenue.
  • Deferred Revenue Expense: A second type of deferred revenue award will be implemented in the near future to systematically manage awards where payments are received in advance of spending, but where spending drives revenue recognition. For this new Deferred Revenue Expense contract type, all revenue in excess of spending will be deferred. The MyReports Sponsored Awards Summary Report will show a net zero impact with this contract type; however, there will be transaction level entries in revenue and deferred revenue that net to zero in each month that has expense activity.

These changes are being implemented to make it easier to meet Governmental Accounting Standards Board (GASB) accounting standards.  GASB requires that revenue be recognized when earned. If revenue has been recorded due to cash receipt or invoicing but certain milestones or actions must be completed before it is considered earned, the revenue cannot be included in current earnings and must be deferred into a future period.

If you have questions or need more information about this process, send email to [email protected].