Financial Services

Deferred Income, Income in Advance Policy

Further information


Accrual accounting relies on matching income and expenses to the period in which the service is performed and not necessarily to the period when the revenue is actually received in cash.

Policy statement

Given the above, when amounts are received in advance of the related expense or delivery of goods and services, they may be treated as deferred income or income in advance. An example would be the receipt of income in the form of registration fees for a seminar to be held in six months or in the next financial year.

These registration fees would be considered deferred income (or income in advance) and would first be recognised as a liability in the balance sheet and would then be transferred as income to the relevant project/grant in the period when the seminar was actually held.

For assistance in recognising income received in advance appropriately in the financial system, contact your relevant Service Delivery Centre.

Key controls

  • Segregation of duties: responsibilities for billing (raising invoice) adequately segregated from those for collection, deposit of funds and credit issuance.
  • Reviewing and approving of credit notes as per University Financial Delegation.
  • Prompt investigation of credit issuance and disputes with billing amount.
  • Establishment of a documented Revenues and Receivables procedures and controls to ensure all staff know the processes they are expected to follow.
  • Periodic review and approval by legislative bodies of rate of taxes, fines, fees, programs of tax exemption, rate schedules and the like.
  • Regular review on delinquent accounts and take prompt action to collect or consider them for write-off on a timely basis.
  • Retention of records for audit purposes.