Revenue recognition policy
Intent and objectives
To ensure all staff of RMIT University are consistent in revenue recognition.
To ensure that the authorisation, accounting treatment and overall responsibility for revenue recognition comply with RMIT University’s legislation, Australian Accounting Standards and other relevant State and Federal legislation
This policy is applicable to:
- Recurrent and non-recurrent revenue from Commonwealth, State and local government sources. Recurrent revenue is that which is received frequently/on a regular basis
- Revenue from non-government sources of RMIT and its controlled entities that are under central financial management of financial services.
1. General principles:
Revenue is the gross inflow of economic benefits during the period arising in the course of ordinary activities when those inflows result in increases in equity.
For RMIT University, possible sources of revenue are:
a. Recurrent and non-recurrent revenue from Commonwealth, State and local government sources:
- Commonwealth operating, capital and research funds
- higher education loan programs
- research grants
- State and local government financial assistance
b. Revenue from non-government sources:
- student fees and charges
- investment income
- consultancy and contracts income
- research revenue
- other revenue e.g. donations and bequests, scholarships and prizes, sales revenue, hiring of facilities
- recoveries and reduction revenue
- recoveries against expenditure
- reduction of expenditure
2.1 The University will ensure that all recognised revenues are based on contracts with government and external public and private sector organisations.
2.2 Contracts must be signed on behalf of RMIT University only by persons who are fully aware of the University’s obligation attached to the revenue received and in accordance with the Delegations Policy and schedules.
2.3 ‘Outside activities’ that generate non-government revenue such as consulting and research are based on a fee for service basis.
3. Recognition and measurement
3.1 Revenue is recognised when it is probable that future economic benefits will flow and those benefits can be measured reliably.
3.2 RMIT University is required to use the accrual accounting method, which means that income is recognised when it is earned except where a contract or the nature of government funding does not permit recognition of income in any other period other than that in which it is received as cash by the University.
3.3 The basis of recognition and measurement of revenue from business activities is listed in the Revenue Recognition Procedure.
3.4 Revenues from a business activity are recognised in the same period the expenditure is incurred for that business activity. (See Revenue Recognition Procedure).
4. Overall responsibility
4.1 The Executive Director Financial Services is responsible for the recognition and classification of revenue.[Next: Supporting documents and information ]