Chapter 2: Financial Reporting Overview

The purpose of this section is to provide a high level overview of the University of Alberta's financial reporting.

Authority and purpose
The Governors of The University of Alberta is a corporation that manages and operates the University of Alberta (the university) under the Post-secondary Learning Act (Alberta). All members of the Board of Governors are appointed by either the Lieutenant Governor in Council or the Minister of Advanced Education, with the exception of the Chancellor and President, who are ex officio members. Under the Post-secondary Learning Act, Campus Alberta Sector Regulation, the university is a comprehensive academic and research institution offering undergraduate and graduate degree programs as well as a full range of continuing education programs and activities. The university is a registered charity, and under section 149 of the Income Tax Act (Canada), is exempt from the payment of income tax. The university follows Canadian Public Sector Accounting Standards (PSAS).

External reporting
The university must comply with a number of external reporting requirements in order to continue to receive government funding and to maintain its status as a registered charity. The following are some examples:

  • annual audited consolidated financial statements
  • Government of Alberta legislative and statutory reporting requirements
  • federal government legislative and statutory reporting requirements (e.g. Statistics Canada, Canada Revenue Agency (CRA) Registered Charity Information Return)
  • U.S. charitable returns and other government requirements
  • financial reporting to sponsors (e.g. research projects)

As part of the Government of Alberta (GoA) reporting entity, the university is required to provide an annual report for the purposes of consolidating the university's financial results into the GoA financial statements. This report identifies all assets, liabilities, revenue and expense transactions attributable to all GoA related parties, which are eliminated (by the GoA) for consolidation purposes.

Internal reporting
Internal reporting is used by many levels of users for a variety of reporting needs such as:

  • management reporting (stewardship)
  • budgetary control (funds available)
  • accountability (units responsible for accuracy and completeness)

For more information on internal reporting, refer to Guide Chapter 5 (Financial Reporting for Users).

Classification of revenue and expenditures
The fund chartfield (e.g. F210) is an institutional internally defined coding structure which enables the university to meet both its internal and external reporting requirements. Fund provides a broad classification of revenues and expenditures based on criteria such as funding/budget source, purpose, and restrictions on use.

University funds are classified as either unrestricted or restricted:

  • Unrestricted funds revenue generally include government grants, student tuition fees, revenues from ancillary services and other fee for service activities and investment income available for general spending. Unrestricted funds can be used for any purpose consistent with the mission of the university and are generally used to pay operating costs. These funds are often referred to as "operating" funds. Unspent revenue is included in "annual surplus" in the consolidated statement of operations.
  • Restricted funds are those funds that have restrictions placed on their use/purpose by external sponsors and donors. Restricted funds revenue includes grants, donations and endowment spending allocation. Unspent revenue is reflected as "deferred revenue" (i.e. a liability) in the consolidated statement of financial position. The university only recognize this funding as "revenue" when the external restrictions have been met (e.g. generally when funds have been expended).

All restricted funds revenue is processed centrally by either Financial Services or Research Services Office (for sponsored research awards). Unrestricted and restricted revenues cannot be co-mingled.

University funds
Within the unrestricted and restricted classification there is a further segregation (by fund) to reflect the nature and restrictions on funding as well as to enhance accountability, budgetary control, and stewardship of resources. This further fund breakdown assists in providing relevant and useful financial reporting. The university funds are:

Unrestricted funds

Central Institution (F100)
Supports expenditures incurred on behalf of the institution (e.g. utility cost) as well as institutional initiatives such as scholarship and human resources programs. This fund includes all institutional revenues that are part of the planning budget that supports both institutional program (F100) and units' general operating activities (F210). The main sources of revenue include the Government of Alberta Campus Alberta operating grant, student tuition and fees, and investment income available for general spending.

Operating (F210)
Supports the university's mandate of teaching, research (not funded through sponsored research agreements) and community service. It also supports administrative and other infrastructure costs in support of these core activities. F210 includes activities funded by fee for service activities. Many activities within this fund are funded by expenditure budget allocations (supported by revenue in F100).

Ancillary Services (F310)
Ancillary Services are operational units whose function is to provide support services and products to the university community (staff, students, external customers). Ancillary Services operate on a full cost recovery or break even basis; in some cases, a profit may be generated.

For more information on F100, F210 and F310 refer to:
Budget Variance Accountability Policy
Budget Variance Accountability Procedure
Budget Reallocation Policy
Budget Reallocation Procedure
University Contingency Procedure
Resource Planning website

Capital (Operating) (F320)
For capital projects that are funded by a transfer from unrestricted funds (generally from F210). Capital unrestricted projects are defined as those projects that are CEAR approved (therefore $100k or greater). These capital projects are mainly for construction and renovation.

For more information on capital projects refer to:
Capital Expenditure Authorization Request Policy
Capital Expenditure Authorization Request Procedure

Research (Operating) (F330)
For research projects that are funded by a transfer from unrestricted funds (generally from F210). These research projects include funding for lab or start-up costs or to match or top-up a restricted research project. This fund also includes internal and external revenue for research initiatives (e.g. research conference fees, fee for research service activity).

Restricted funds

Capital (F520)
For capital projects that are funded from restricted funds and CEAR approved (therefore $100k or greater). These capital projects are for acquisition or construction of buildings, renovations and Facilities and Operations (only) equipment and furnishings acquisitions.

Sponsored Research (F530*, E0010-E4899, E98xx)

For research projects (including graduate awards) that are funded from restricted funds. The Exxx funds are funded by the endowment spending allocation.
*F530 reference also includes: F535 and F531; these funds are in the process of winding up.

For more information on sponsored research funds refer to:
Application for Indirect Cost Recovery Rates Procedure
Indirect Costs of Research Procedure
Research - Over Expenditure (Authorized) Procedure
Research - Over Expenditure (Unauthorized) Procedure
Research Services Offices website

Special Purpose (F551, F552, E5000-E9799)
These restricted funds are used to manage funding in support of teaching and learning.

F551 - Special Purpose (projects)
The purpose of this fund is to manage the grants for the Faculty of Medicine's Academic Medicine and Health Services Program (AHMSP).

F552 - Undergraduate Student Awards
Supports undergraduate student awards and graduate and undergraduate bursaries that are funded by restricted funds. The Office of the Registrar administers all awards and bursaries in this fund.

F550 - Special Purpose (deptID)
For projects that are funded from restricted funds for grants or donations greater than $1 million that are not considered sponsored research. This fund is rarely used and is administered by RSO. Non-research grants less than $1 million are managed in the Sponsored Research fund (F530).

Exxx funds are funded by the endowment spending allocation.

Endowments

Endowments represent contributions which are invested in perpetuity, with a portion of the investment earnings used to support specific university initiatives as set out in the purpose of the endowment. The use of a unique fund number for each endowment enables ease of reporting for the two distinct components:

  • capital accounts - records contributions which includes donations, transfers, investment earnings not allocated for spending and other capitalizations.
  • spending account- includes revenue (endowment spending allocation),expenditure, funds available for spending. Refer to Fund section above with respect to the Exxxx numbering convention regarding research and special purpose endowment spending accounts.

For more information on endowments refer to:
Endowment Management Policy
Endowment Management Procedure

For information on the university's endowment investments, go to the Financial Services - Investments and Treasury website.

Other

There are some accounting treatments that are reflected differently between external reporting requirements (i.e. PSAS) and internal reporting. Some of the more significant differences are:

  • capital assets - reflected as an expenditure (507xxx expense account) in internal reporting while for external reporting the expenditure is capitalized (i.e. an asset) and amortized to expense over the life of the asset.
  • restricted revenue - grants and donations received or grants receivable are reflected as revenue (40xxxx) in internal reporting while for external reporting the unspent amount (i.e. unspent revenue) is reflected as deferred revenue (i.e. a liability). Refer to previous section on classification of revenue and expenditures.

Last updated: February 2019