Effective: April 1, 1999
Responsibility: Vice-President and Chief Financial Officer
Recording of Actual and Accrued Revenue
1.1 Revenue vs. Cost Recoveries
Recoveries of actual costs will be treated as cost recoveries and everything else (i.e. partial recoveries, agreed price, etc.) will be treated as revenues
- Revenues, as opposed to expense recoveries, will be recorded in the books of account and classified by the categories as determined by senior management for reporting purposes.
- Revenues will not be credited to expense accounts to offset or decrease the expenses of a category, unit, cost centre or working business structure (WBS).
- The CRTC, as a condition of licence, require the Corporation to identify separately, revenues associated with individual services (i.e. Specialty Channels).
- Items such as program sponsorship and donations must be recorded as revenues and not offset against expenses.
- Expense recoveries will not be recorded as revenues, but as credits to offset expenses and will include such items as follows:
- Recoveries/charge backs between internal cost centres and/or WBS components
- Recoveries of expenses from external agencies when the actual or estimated amounts by category are clearly specified in the contract
- Recovery of expenses incurred by the Sales Department pertaining to various "value added" sales incentive plans where the total cost of the package is either included with the value of the advertising being sold, or shown separately.
Network Finance and Administration will be responsible to ensure the following:
- That the commercial billing function for advertising revenue and/or invoicing for the sale or rental of goods, rights or services are properly recorded in the books of account of the Corporation
- That all revenue is recognized when earned. Accordingly, at the end of each reporting period, all estimated revenue earned, but not billed, shall be accrued using the proper account, cost centre or WBS. Accruals for non-advertising revenue will be made in accordance with the terms and conditions of contracts.
- That advertising revenue will be reduced by the estimated unearned revenue amount (where "make-goods" must be telecast to earn it) if such amount exceeds 1% of the total revenue for the period. At year-end, such adjustment will be made regardless of the amount involved.
- That all advertising revenue amounts, whether actuals or estimated accruals, are recorded net of agency commissions.
- This policy was updated November 2003
- This was originally Corporate Finance and Administration Policy 801.10 - Revenue Recording and Reporting
All questions pertaining to the interpretation or application of this policy should be referred to the Director, Policy and Internal Control.
DEPARTMENT RESPONSIBLE TO UPDATE THIS WEBPAGE
Regardless of the amount involved, studios may still be leased/rented to outside enterprises However, in order to reduce/eliminate the potential for disputes and losses, there should be no cash deals. An official contract should be prepared and sent to the Network Finance offices in Toronto or Montreal so that an official invoice can be processed. For amounts less than $500.00, payments in advance (cheque or money order) should be obtained.
PROCEEDS FROM SALE/TRADE-IN OF ASSETS
All proceeds from the sale and/or trade-in of assets are to be recorded as revenue. Under no circumstances are assets to be capitalized net of the sale or trade-in value.