Summer Session Deferrals

Scope

This policy addresses the University’s accounting for revenues and expenses related to the summer academic term, which crosses fiscal years.

Reason for Policy

To provide financial reporting guidelines that ensures compliance with GASB standards.

Policy Statement

The Governmental Accounting Standards Board (GASB) requires the financial reporting of revenues and expenses related to the summer academic term to be reported in the fiscal year in which the services are performed and the expenses are incurred.  When summer school sessions cross fiscal years, student related fees revenue and related expenses for the summer academic term should be split between the two fiscal years based on the timing of when services are performed and when expenses are incurred. 

Summer session salaries and benefits are to be allocated between current year expense and prepaid expense based on when the salaries are earned by the faculty. Deferral entries should be made at a minimum at fiscal year-end.   All deferred revenue and prepaid expense entries will be set to reverse in the subsequent fiscal year.

The process for allocating the revenues and expenses to the two fiscal years should be calculated each year based on the number of days in the summer semester that falls into each fiscal year.  Revenues and expenses to be allocated include the following:

• Current year tuition/fee revenues
• Current year Deferred Revenue
• Financial aid expense (reduction of Deferred Revenue)
• Prepaid Expense (teaching salaries)

Note: Financial aid that is recorded in a loan fund should be included in the summer session deferral journal entry and should use the same balance sheet account that is used to record aid for other semesters.

Definitions

Deferral - accounting term that means to defer or to delay the recognition of certain revenues or expenses until a later date. 

Deferred Revenue - a liability that refers to revenue that has not yet been earned but represents products or services that are owed to the customer.

Incurred - cost when goods or services are received even if the expense has not yet been paid.

Prepaid Expense - an asset that represents an expenditure that is paid in one fiscal year for goods or services for which the goods or services will not be received until a future fiscal year.

Accountabilities

UM System Controller’s Office:

• Notify the campuses to remind them to make summer session adjustments.
• Perform a year to year comparative review to ensure the summer student related fees Deferral entries have been made and that the amounts are reasonable.

Campus Accounting Offices:

• Allocate and make the entries for the summer student related fees and expenses.

Campus Cashier’s Offices:

• Ensure proper deferral settings in student system

Additional Details

Forms

Related Information

GASB website: http://gasb.org/

History

The allocation percentage was changed in March 2021 from a 50/50 split between fiscal years to a calculation based on the number of days that the summer semester falls into each applicable fiscal year.

Formerly Accounting Policy Manual 65.15 – Deferral of Summer Student Related Fees and Related Expenses (revised 4/21/2007)

Procedure