Presented by Frank Leonard March 29, 2007
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Presented by Frank Leonard March 29, 2007 Deferred Revenue Deferred Revenue Account Analysis Account Analysis Schedule S-9 Schedule S-9 1
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Deferred Revenue Account Analysis Schedule S-9. Presented by Frank Leonard March 29, 2007. 1. Deferred Revenue Account Analysis Schedule S-9. Objectives. To provide departments the opportunity to validate the data in deferred revenue accounts prior to external auditor’s review - PowerPoint PPT Presentation
Transcript of Presented by Frank Leonard March 29, 2007
Presented by Frank Leonard March 29, 2007
Deferred Revenue Deferred Revenue Account AnalysisAccount Analysis
Schedule S-9Schedule S-9
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ObjectivesObjectives To provide departments the opportunity to
validate the data in deferred revenue accounts prior to external auditor’s review
To avoid unnecessary audit findings – New Statement on Auditing Standards 112 focusing on internal controls
To ensure proper representation of financial data
Deferred Revenue Account Analysis Schedule S-9Deferred Revenue Account Analysis Schedule S-9
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Review of Last Year’s S-9Review of Last Year’s S-9 Participating departments had deferred revenue accounts
cleaned up by year-end. THANK YOU
Year-end adjustments reflected the new 3 month recognition standard.
Deferred Revenue Account Analysis Schedule S-9Deferred Revenue Account Analysis Schedule S-9
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Objectives Met:Objectives Met:
Not all departments participated.
More information needed in the Deferred Revenue Source field.
Information in this same format needed for year-end…Introducing the new “S-12”(form will be available at YE)
Objectives NOT Met:Objectives NOT Met:
FLeonard
mention that telephone calls or emails will be used this year to remind those that have not submitted in order to improve participation.Show example of Revenue Source field on new format of S-9
Deferred RevenueDeferred Revenue
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Deferred revenue arises when a potential revenue transaction does not meet both the “measurable” and “available” criteria for recognition in the current period.
Deferred Revenue Account Analysis Schedule S-9Deferred Revenue Account Analysis Schedule S-9
Criteria for Revenue RecognitionCriteria for Revenue Recognition
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Under Accrual Basis of AccountingUnder Accrual Basis of Accounting (For Proprietary Funds only - Internal Service Funds, Enterprise Funds) :
Deferred Revenue Account Analysis Schedule S-9Deferred Revenue Account Analysis Schedule S-9
Revenue must be earned (measurable) before it can be recognized. However, cash does not have to be received (available) before revenue is recognized.
Revenue must be earned (measurable) and available. This means it must be earned and cash must be received within 3 months or 12 months if expenditure-driven grant. The revenue must also be eligible to recognize revenue.
Under Modified Accrual Basis of AccountingUnder Modified Accrual Basis of Accounting (For Governmental Funds only - General Fund, Special Revenue Funds, Capital Project Funds, and Debt Service Funds) :
Criteria for Revenue RecognitionCriteria for Revenue Recognition
Deferred Revenue Account Analysis Schedule S-9Deferred Revenue Account Analysis Schedule S-9
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Eligibility requirements: Allowable cost restrictions (Expenditure-driven
/ Reimbursements) Time restrictions (Advances) Contingencies Required characteristics of recipient
Criteria for Revenue RecognitionCriteria for Revenue Recognition
Deferred Revenue Account Analysis Schedule S-9Deferred Revenue Account Analysis Schedule S-9
Eligible or EligibilityEligible or EligibilityThe characteristic that must exist for a given entity to be considered qualified or allowed to take legal ownership of the money received for a particular program.
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NOTE: Purpose restrictions cannot be used to establish NOTE: Purpose restrictions cannot be used to establish eligibility.eligibility.
A. Proceeds Received in Advance of A. Proceeds Received in Advance of Revenue Entitlement (Unearned)Revenue Entitlement (Unearned)
1. To receive cash in advance of revenue recognition:
Account Debit Credit
Cash (101100) $100Deferred Revenue (230XXX) $100
2. To recognize revenue once the criteria has been met:
Account Debit CreditDeferred Revenue (230XXX) $100Revenue (7XXXXX) $100
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Deferred Revenue Account Analysis Schedule S-9Deferred Revenue Account Analysis Schedule S-9
Accounting TreatmentAccounting Treatment
B. Proceeds Received Subsequent to B. Proceeds Received Subsequent to Revenue Entitlement (Unavailable)Revenue Entitlement (Unavailable)
1. Once revenue has been earned by a governmental fund, a receivable and offsetting deferred revenue should be entered.
If these amounts remain at year-end, it is considered “Unavailable.” These amounts should be identified using Schedule S-12.
Account Debit Credit
Receivable (11XXXX) $100
Deferred Revenue(230XXX) $100
(continued)…
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Deferred Revenue Account Analysis Schedule S-9Deferred Revenue Account Analysis Schedule S-9
Accounting TreatmentAccounting Treatment
2. Once proceeds are received, (available), the entry should be reversed and the revenue should be recognized. Delaying the recognition of revenue until cash is received is a modified accrual concept for use with governmental funds only.
Account Debit CreditReceivable (11XXXX) $100Deferred Revenue(230XXX) $100
To reverse initial entry
Cash (101100) $100Revenue(7XXXXX) $100
To recognize revenue
B. Proceeds Received Subsequent to B. Proceeds Received Subsequent to Revenue Entitlement (Unavailable)Revenue Entitlement (Unavailable)
Deferred Revenue Account Analysis Schedule S-9Deferred Revenue Account Analysis Schedule S-9
Accounting TreatmentAccounting Treatment
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Questions??Questions??
Deferred Revenue Account Analysis Schedule S-9Deferred Revenue Account Analysis Schedule S-9
ACO ContactsACO Contacts
For questions regarding deferred revenue, please contact:
Dolores Reyna at micro 5-9380 or
Frank Leonard at micro 5-3877
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Deferred Revenue Account Analysis Schedule S-9Deferred Revenue Account Analysis Schedule S-9
