The Catholic University of America

Finance: Accounting
Revenue Recognition Policy


Approved by: Board of Trustees
History: Issued -- March 14, 2002
  Revised --
Related Policies: Classification of Net Assets
Additional References:  
Responsible Official: Vice President for Finance and Treasurer tel. 202-319-5606


I. Introduction

To provide clear, consistent guidance to individuals conducting activities and receiving payments on the university's behalf, the following guidelines are provided to assist in the determination of whether a transaction creates revenue for the university under Generally Accepted Accounting Principles.

This policy applies to all transactions conducted in the ordinary course of business of the university, its faculty, staff and students.



II. Definition of Revenue

The university utilizes the definition of revenue from Paragraph 78 of the FASB Statement of Financial Accounting Concepts No. 6, "inflows or other enhancements of assets of an entity or settlements of its liabilities (or a combination of both) from delivering or producing goods, rendering services, or other activities that constitute the entity's ongoing major or central operations."

III. Tuition and Fees

The university recognizes revenue from tuition and fees when earned (i.e., when classes begin) rather than when paid. Tuition and fees are recorded over the terms for which they relate. Deposits and prepayments of tuition and fees are recorded as deferred until the start of the term for which they are intended. Tuition is recorded in the financial statements net of discounts for scholarships.

IV. Federal and Private Grants and Contracts

The university recognizes revenue for research and other activities funded by the Federal Government and other entities as qualifying expenses for the research and other activities are incurred up to a ceiling of the amount awarded. Indirect costs associated with research or other activity are also recognized as the expenses for the activity are incurred.

V. Contribution Revenue

The university recognizes contribution revenue when gifts are received or when an unconditional promise to make a gift has been received. Conditional promises to give are recognized when the conditions on which they depend are substantially met. Contributions of assets other than cash are recorded at their estimated fair value as of the date of the gift. Contributions to be received after one year are discounted at a rate commensurate with the risk involved. Amortization of the discount is recorded as additional contribution revenue and used in accordance with donor-imposed restrictions, if any, on the contributions.

Restrictions on gifts are recorded as either temporarily restricted (if the donor limits use to later periods of time or after specific dates, or to specific purposes) or permanently restricted (if the donor limits use with no expiration or ability to remove restrictions by performance). For more clarification of restrictions and net asset classes, see Net Asset Classification Policy.

VI. Investment Revenue Definition

The university carries equity securities with readily determinable fair values and debt securities at fair market value. Only limited partnerships and other investments whose market value is not readily discernible are carried at the lower of cost or fair value. The university recognizes as unrealized gains (losses) the increases and decreases related to market activity. The university further records investment income as interest, dividends, rents, royalties, and similar payments when earned. The university records investment management fees as contra revenue, reducing the investment income.

VII. Sales and Services of Departments

Certain university activities which relate incidentally to instruction and research, such as publication of books, research journals and other publications, generate revenues in their normal course of business for activities such as sales of books and journal subscriptions. These activities are recorded as sales and services of departments. All subscriptions are recognized as income over the period in which the subscription is fulfilled.

VIII. Sales and Services of Auxiliary Activities

Auxiliary activities are those departments organized specifically to provide goods and services to students, faculty and staff at a fee directly related to the cost of the goods and services provided. Examples include the Office of Housing Services and Dining Services.

IX. Changes in the Value of Split-Interest Agreements

Split Interest arrangements, in which the university receives benefits shared with other beneficiaries, are recorded at fair value when the executed gift document is received. Irrevocable split-interest agreements are recorded as intentions to give (pledges). Agreements which contain future distributions are recorded at the present value of those estimated future distributions.

X. Other Revenues

The university records as other revenues fees from operations such as Parking. Other revenues not classified in any of the other categories are also recorded as Other Revenues.

XI. Exclusions from Revenue

The university does not include as revenue:

  1. Reimbursements of expenses such as an employee paying for a personal telephone call made from the university in an emergency or repayment of a travel advance.
  2. Funds received on behalf of others (true agency funds) when the university is acting on behalf of the other entity and ownership of the funds remains with the other entity. The determination of a true agency relationship shall be made by the Vice President for Finance or the university Controller based on discretion on the use of the funds.