RE:RE:RE:RE:Schoolboyis right about commissions from the past from RYU "The only way to accurately determine a/r is to have a competent person review each student's profile. It's unlikely that any auditor would do that. I doubt that BMO did. They should have."
Well said. This is what Big Mac's people are supposed to be doing.
Further, I'll work with real world data specific to KGIC not the data from substandard ESL schools you recruit for.
The timing perspective is clearly outlined below from someone above your pay grade.
Have a good read and you may learn to articulate your business in a more accurate fashion. "From a timing perspective, tuition fees which are paid in advance of course offerings during a particular reporting period may span several reporting periods depending on (i) timing of start date and (ii) length of study period. This can result in volatility between quarters when reviewing either deferred revenue or tuition fee revenue in isolation."
Loyalist explains tuition fee revenue accounting
2015-06-10 09:34 ET - News Release
Mr. David McAdam reports
LOYALIST PROVIDES ADDITIONAL INFORMATION RELATED TO TUITION FEE REVENUE AND DEFERRED REVENUE FOR Q4 2014 AND Q1 2015
Loyalist Group Ltd. is providing additional information related to tuition fee revenue and deferred revenue in response to a number of investor and analyst inquiries seeking clarification of the company's overall business activity levels during fourth quarter 2014 and first quarter 2015.
Accounting policies for revenue recognition and deferred revenue
As described in the notes to the audited financial statements for the year ended Dec. 31, 2014, Loyalist's accounting for tuition fee revenue recognition is on a straight-line basis over the period of instruction. Tuition fees paid in advance of course offerings are recorded as deferred revenue and set up as a liability on Loyalist's balance sheet, and later recognized into revenue over the period of instruction.
From a timing perspective, tuition fees which are paid in advance of course offerings during a particular reporting period may span several reporting periods depending on (i) timing of start date and (ii) length of study period. This can result in volatility between quarters when reviewing either deferred revenue or tuition fee revenue in isolation.
Trend analysis
The attached table highlights the trend between tuition fees, which were recognized as revenue in the statement of earnings during each of the past five quarters, and deferred revenue recognized as a liability on the balance sheet at the end of each respective quarter.
Deferred Tuition fee Quarter revenue revenue Total Q1 2014 $7,639,323 $13,900,009 $21,539,332 Q2 2014 $7,819,874 $14,628,440 $22,448,314 Q3 2014 $5,422,743 $16,059,663 $21,482,406 Q4 2014 $9,686,323 $7,692,264 $17,378,587 Q1 2015 $12,506,815 $7,501,981 $20,008,796
During the fourth quarter of 2014 and the first quarter of 2015, Loyalist experienced a significant increase in deferred revenue at the end of each period. This resulted in a lower level of tuition fee revenues recognized during the quarter than would have otherwise been the case if deferred revenue had remained relatively constant between quarters.
Total activity level (deferred revenue plus tuition fee revenues) declined during the fourth quarter of 2014 when compared with the first three quarters of 2014. There has been a significant recovery in total activity during the first quarter of 2015 when compared with the fourth quarter of 2014.
Timing of course start dates for tuition fee revenue recognition
In order to better understand the underlying driver of the sharp divergence between tuition fee revenue recognized and overall activity level during Q4 2014 and Q1 2015, management further reviewed the underlying data on a student-by-student basis during these periods.
Management determined that the timing of start dates was heavily weighted toward the end of Q1 2015. This timing resulted in significantly higher deferred revenue balances and lower tuition fees recognized when compared with the first three quarters of 2014.
Based on the $12.5-million of deferred revenue as at March 31, 2015, management reviewed the timing of tuition fee revenue to be recognized into the statement of earnings over the scheduled period of instruction as follows:
- Second quarter 2015: 57 per cent;
- Third quarter 2015: 28 per cent;
- Fourth quarter 2015: 10 per cent;
- First quarter 2016 and beyond: 5 per cent.
As noted, approximately 85 per cent of the $12.5-million deferred revenue balance as at March 31, 2015, will be recognized into revenue during Q2 2015 and Q3 2015.
We seek Safe Harbor.