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Quick Reference : Home : Case Studies : Glossary
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Public Monopoly with Management Contract / Financial Aspects /
Funding Sources Costs
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Funding Sources Costs
In most bus operations, farebox revenues account for almost all bus operating income. A majority of authorities receive additional funding from other government entities and banks for operating shortfalls and infrastructure requirements.

Accounting for revenues
The authority should distinguish between internal revenues and revenue that is totally unrelated to the operation. Internal revenues are attributable to the services operated such as fares or charter revenue, indirect revenue such as advertising income. Revenue that is totally unrelated to the operation includes dividends from subsidiary companies, and proceeds from the disposal of assets.

Analysis of these revenue sources enables the authority to identify possible additional income generating activities from existing system assets (buses, stations, etc.) or improvements to current revenue collection methods. The authority should also have separate accounts for bus purchases and infrastructure investments.

Projecting future levels of funding sources
Many authorities and bus operators project future operating and capital sources as part of their annual budget approval process. The financial model will also project future revenues for each revenue source on an annual basis to calculate financial benchmarks and indicators.

In subsequent years, the authority compares the actual to forecast revenue levels to ascertain whether the bus system is making progress toward its financial goals. It can also use this comparison to better understand the reasons underlying the differences between forecasted and actual revenues to improve revenue collection procedures.

The authority should make its own forecasts of bus operators’ revenue as a check on the bus operator’s revenue projections. This activity is part of the authority’s supervisory responsibilities. The authority’s revenue projection and auditing function becomes increasingly important as the bus system shifts to greater private participation and its role changes from supervisor of the government owned bus system to regulator of a privately operated system.

See also
Farebox revenues
Other revenues

   

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