As previously announced in the November 2017 Controller’s Office Newsletter, changes were implemented to the deferred revenue process for contracts and grants. These changes leverage our system to more efficiently 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.
The new contract type Deferred Revenue Expense is now available in the Research Administration System (RAS). This contract type will be used to manage those 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 (job aid) 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.
Contracts and Grants Accounting (CGA) will begin using this contract type immediately. A transition plan is being identified for existing awards that meet the criteria under the Deferred Revenue Expense contract type. CGA will send a communication when the transition plan is finalized.
If you have questions about revenue recognition for contracts and grants, contact the CGA Service Desk.