Accounting and Reporting
for Public
Colleges and Universities
2014-2015
NACUBO Intermediate
Accounting
Objectives
• Upon completion of these materials, you will be
able to
– Comprehend the reporting and recognition
guidance for information included in public
C&U financial reports
– Identify the primary financial statement in
public C & U financial reports
– Describe the characteristics and purposes of
public C&U financial statements and related
information
– Identify how to read and understand public
C&U financial reports
1
Format
• Recognition
– Specific GAAP guidance
• Reporting
– Requirements for information
• Display
– Review and discuss financial statements
• Disclosure
– Overview of required discussion/presentation
Recognition
• GASB organized 1984
– Companion to FASB
– Initially addressed state and local
government guidance
– GAAP hierarchy outlined GASB No. 55
• Reporting entity GASB No. 14
– First to address C&U display
• Compensated Absences GASB No. 16
– Vacation, sick and other costs - sabbatical ?
• Grant revenue recognition GASB No. 24
2
Recognition continued
• Investments and investment pools
reported using fair value GASB No. 31
• Nonexchange transactions GASB No.
33
–
–
–
–
Derived tax revenues I.e., sales tax or income tax
Imposed tax revenues I.e., property tax
Government mandated I.e, gov’t grants
Voluntary nonexchange transactions I.e, gifts,
contributions, pledges
Voluntary Nonexchange
• Gifts
– Includes donations, contributions, some grants,
promises to give, pledges and any other term
used to define a private gift I.e., non pro quo
• Recognized when
– Verifiable
– Measurable and probable of collection
– Eligibility requirements met (more on this later)
• No condition (what is this?) record at Fv
– Unrestricted
3
Other Recognition Concerns
• Restricted
– Program in place
– Time period for resources to be provided
has begun
– Reimbursement basis – allowable
expenditures are made !
• Condition
• Pledge
– Unconditional
– Installment payment
Eligibility
• Eligibility criteria
– Time creates condition
– Purpose
– Funds in hand – prepaid or deferred
– Pledge – not recorded but may be
disclosed in notes
4
Eligibility Example
• The History Department received grant
$5,000 CASH to support faculty travel
– To attend academic meetings this fiscal
year
Debit ???
Credit ???
– To attend academic meetings next year
Debit ??? Credit ???
How would these entries change if a
pledge was received rather than cash?
Eligibility Example
• The University receives an endowment
pledge of $2,500,000
Debit ????
Credit???
• The University receives a capital building
campaign [record all or record FV]
– $ gift
Debit ???
Credit ???
– Pledge
Debit ???
Credit ???
5
More Recognition Issues
• Items included in GASB No. 34
• Infrastructure included in capital
assets
– Capital assets with long lives
– Examples?
• Works of Art
– Asset or treasure
• Contributed service
– Unlike FASB, no new guidance
Other Recognition Concerns
• Impaired capital assets GASB No. 42
– Losses measured and recognized
• Postemployment benefits other than pensions GASB Nos.
43 & 45
– Recognized but not well funded
• Termination benefits and plans GASB No. 47
• Sale or pledge of receivables GASB No. 48
– Criteria re sale (revenue) or collateralized borrowing
(liability)
• Pollution remediation GASB No. 49
– Outlays capitalized and amortized
• Intangible assets - patents, computer software GASB No.51
– Identifiable incurred costs
6
More Recognition
• Service concession arrangements GASB
No. 60
– Parking garage operated by third party
• Old FASB guidance converted to GASB
GAAP GASB No. 62
– Major areas include leases, contingencies,
construction-type contracts, related parties,
etc.
More Recognition
• Deferred outflows and Deferred
inflows GASB 63 and GASB 65
• New category neither asset nor liability
• Pension liability for employee and
employers GASB 67 and GASB 68
• GAAP Hierarchy GASB 70
• Authoritative vs nonauthoritative
7
Financial Reporting Model
• Colleges and Universities report as a
Business-Type Activity (GASB No. 35
amended GASB No. 34 amended again by
GASB 63)
– Charge fee for service
– Full accrual accounting – depreciation and
effective interest recognition
• Required supplemental: Managements
Discussion and Analysis MD&A
• Three required statements
• Note disclosures
– Identify and discuss later
Observations
• Reporting model DOES NOT change
institution’s financial management
• ONLY changes reporting of results
• All statements use classified format
– Classification based on old GAAP ARB 43
• Assets and liabilities
– Current or noncurrent
NOT long-term
• Deferred outflows and Deferred inflows
• Revenue and expenses
– Operating, nonoperating, capital or extraordinary
8
Fund balances are NOT USED
Net Position IS
• Fund balance categories – budget categories!
–
–
–
–
–
–
Current funds unrestricted
Current funds restricted
Loan
Endowment
Similar Funds (Investments)
Plant
• Net Position categories – financial reports
– Capital assets net of related debt and depreciation
– Restricted
• Nonexpendable
• Expendable
– Unrestricted
MD&A
• REQUIRED COMPONENTS
– Provides objective and easily readable analysis
- not boiler plate
– Brief discussion of basic financial statements
– How the statements relate to one another
– Significant differences in data statements
provide
– Reinforces analysis and result of operations
9
Other MD&A Issues
• Describes known facts typically
– Mandates 8 items and element
disclosures (see MD&A checklist)
• Comparative
– Discusses institution
– Discusses each of the statement
• Review Clemson University’s MD&A
in posted material
Financial Statement Display
• Required financial statements for
proprietary funds (GASB 34, p. 33, ¶91)
are:
– Statement of Net Position [amended by
GASB 63]
– Statement of Revenues, Expenses, and
Changes in Fund Net Position [Fund Equity]
– Statement of Cash Flows
10
Statement Of Net Position
Clemson University
CLEMSON UNIVERSITY
STATEMENT OF NET POSITION
June 30, 2013
C lemson
University
C lemson University
Research Foundation
ASSETS
Current As s et s :
Cas h and cas h eq uivalent s
Res t rict ed As s et s - Current :
Cas h and cas h eq uivalent s
Acco unt s receivab le (Net o f p ro vis io n fo r d o ub t ful acco unt s o f $6 9 0 ,13 8 )
Grant s and co nt ract s receivab le
Co nt rib ut io ns receivab le, net
Int eres t and inco me receivab le
St ud ent lo ans receivab le
Invent o ries
Prep aid it ems
Co mmo n s t o ck
To t al current as s et s
$2 0 1,78 1,150
$4 ,9 0 0 ,714
179 ,3 53 ,6 6 0
15,8 71,0 71
19 ,14 3 ,6 8 2
2 ,110 ,8 3 9
1,4 6 6 ,2 78
6 2 ,2 9 3
2 ,13 5,8 54
7,3 3 9 ,3 9 2
3 ,8 6 1,74 5
2 ,14 3 ,159
-
—
18 9 ,2 50
4 2 9 ,2 6 4 ,2 19
11,2 71,3 9 4
—
176 ,52 6
No ncurrent As s et s :
No t es receivab le
Co nt rib ut io ns receivab le, net
Inves t ment s
Res t rict ed As s et s - No ncurrent :
Cas h and cas h eq uivalent s
St ud ent lo ans receivab le
Ot her
Cap it al as s et s , no t b eing d ep reciat ed
Cap it al as s et s , net o f accumulat ed d ep reciat io n
To t al no ncurrent as s et s
To t al as s et s
DEFERRED OUTFLOW OF RESOURCES
To t al as s et s and d eferred o ut flo w o f res o urces
151,9 56 ,8 8 3
2 ,6 6 7,9 8 7
2 ,4 8 2 ,0 8 1
3 2 ,8 52 ,9 2 5
8 ,4 9 9 ,16 6
12 7,2 2 4 ,8 4 7
6 4 3 ,3 73 ,9 3 0
1,4 8 4 ,757
9 75,73 3
2 ,8 3 3 ,8 9 5
9 6 9 ,0 57,8 19
5,2 9 4 ,3 8 5
1,3 9 8 ,3 2 2 ,0 3 8
16 ,56 5,779
0
0
$1,3 9 8 ,3 2 2 ,0 3 8
$16 ,56 5,779
2 5,6 2 2 ,8 3 1
16 ,3 74 ,4 0 0
16 ,3 9 7,2 79
1,3 9 4 ,771
3 4 ,6 6 7,50 9
12 ,2 17,3 2 0
9 4 7,9 3 9
14 9 ,6 0 7
3 ,78 3 ,72 1
9 15,8 2 7
2 ,4 72 ,50 2
112 ,4 71,2 0 4
3 ,550 ,3 0 2
LIABILITIES
Current Liab ilit ies :
Acco unt s and ret ainag es p ayab le
Accrued p ayro ll and relat ed liab ilit ies
Accrued co mp ens at ed ab s ences and relat ed liab ilit ies
Accrued int eres t p ayab le
Unearned revenues
Bo nd s p ayab le
Cap it al leas es p ayab le
No t es p ayab le
Dep o s it s
Fund s held fo r o t hers
To t al current liab ilit ies
4 ,3 12
9 56 ,4 4 5
10 4 ,6 2 5
12 ,4 18
No ncurrent Liab ilit ies :
Accrued co mp ens at ed ab s ences and relat ed liab ilit ies
Dep o s it s
Fund s held fo r o t hers
Bo nd s p ayab le
Cap it al leas es p ayab le
No t es p ayab le
8 ,4 6 1,72 1
74 5,56 4
7,8 4 4 ,10 3
13 6 ,6 54 ,3 3 6
14 ,9 6 3 ,0 0 9
2 ,6 6 8 ,73 3
To t al no ncurrent liab ilit ies
16 8 ,6 6 8 ,73 3
To t al liab ilit ies
2 8 1,13 9 ,9 3 7
DEFERRED INFLOW OF RESOURCES
To t al liab ilit ies and d eferred inflo w o f res o urces
2 ,6 6 8 ,73 3
6 ,2 19 ,0 3 5
0
0
$2 8 1,13 9 ,9 3 7
$6 ,2 19 ,0 3 5
$ 6 0 5,6 6 6 ,56 S
$2 ,52 1,0 2 6
NET POSITION
Net inves t ment in cap it al as s et s
Res t rict ed fo r no nexp end ab le p urp o s es :
Scho lars hip s and fello ws hip s
Res t rict ed fo r exp end ab le p urp o s es :
Scho lars hip s and fello ws hip s
Res earch
Ins t ruct io nal/ d ep art ment al us e
Lo ans
Cap it al p ro ject s
Deb t s ervice
Unres t rict ed
To t al net p o s it io n
57,8 8 0 ,19 4
172 ,6 0 6 ,4 0 3
72 3 ,10 1
2 0 ,8 14 ,6 6 2
1,9 0 3 ,9 6 1
115,4 52 ,4 3 3
9 ,0 4 4 ,10 0
13 3 ,0 9 0 ,6 8 2
$1,117,18 2 ,10 1
2 ,9 6 8 ,0 3 6
4 ,8 57,6 8 2
$10 ,3 4 6 ,74 4
11
Statement Highlights
• Balanced format
• Classified assets and liabilities
– Presented in order of liquidity
• Deferred outflow and Deferred inflow
• Net Position rather than fund balance
– Invested in capital assets net of related debt
– Restricted
• Nonexpendable - detailed by type
• Expendable – detailed by type
– Unrestricted [presented as a single number]
Deferred Categories
• GASB No. 63
– Creates deferred outflows and inflows
• new asset and liability category presented following
the noncurrent categories
• Deferred are neither assets not liabilities
• Typically long-term noncurrent in nature
– Deferred items attributable to capital assets
included in capital asset portion of net position
12
Deferred Outflow Items
• Grants paid in advance of meeting
timing requirements
• Deferred amounts from refunding
debt (debits)
• Cost to acquire rights to future
revenues
• Loss from sale-leaseback
• Acquisition costs for risk pools
Deferred Inflow Items
• Grants received in advance of meeting timing
requirements (i.e. eligibility requirement)
• Taxes received in advance
• Deferred amounts from refunding debt (credit)
• Proceeds from sales of future revenue
• Deferred gain from sale-leaseback
• ‘Regulatory’ credits (gains on other reductions)
13
New GASB Pension Reporting
• Employers must record (a
proportionate share) in their financial
statements
– Net pension liability
– Pension expense
– Deferred inflows and deferred outflows
– Expanded footnote disclosures
– New required supplementary tables
Impact of GASB Pension Reporting
Statement of Net Position
6/30/20XX
($ in millions)
As Reported
Current assets
Noncurrent assets
Total assets
Deferred outflows
Total assets and deferred outflows
$ Current liabilities
Noncurrent liabilities
Total liabilities
Deferred inflows
Net position:
Net invested in capital assets
Restricted ‐ nonexpendable
Restricted ‐ expendable
Unrestricted
Total net position
Total liabilities, deferred inflows and net position
$ 2,069
6,225
8,293
‐
$ 8,293
1,224
1,819
3,043
‐
1,979
1,217
592
1,462
5,251
$ 8,293
Effect of
GASB 68
As Restated
$ 493
$ $ 2,874
220
(2,601)
2,069
6,225
8,293
493
8,787
1,224
4,693
5,917
220
1,979
1,217
592
(1,139)
2,650
$ 8,787
14
Statement Of Revenues, Expenses,
And Changes In Net Position
Clemson University
CLEMSON UNIVERSITY
STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION
For the year ended June 30, 2013
Clemson
University
Clemson University
Researc h Foundation
REVENUES
Operating Revenues:
Student tuition and fees (net of scholarship allowances of $70,717,754)
Federal grants and contracts
State grants and contracts
Local grants and contracts
Nongovernmental grants and contracts
Sales and services of educational and other activities
Sales and services of auxiliary enterprises - pledged for revenue bonds
(net of scholarship allowances of $11 604 477)
Sales and services of auxiliary enterprises - not pledged
Other operating revenues
Total operating revenues
EXPENSES
Operating Expenses:
Compensation and employee benefits
Services and supplies
Utilities
Depreciation
Scholarships and fellowships
Total operating expenses
Operating loss/income
$288,778,074
64,466,937
51,376,441
796,200
9,445,805
17,203,319
94,438,299
20,179,341
31,372,198
578,056,614
419,665,419
219,148,874
17,960,910
32,715,339
26,379,628
715,870,170
4,941,534
1,070,418
5,773,782
11,785,734
10,985,047
239,082
463,274
11,687,403
(137,813,556)
98,331
92,784,135
10,947,994
56,402,755
1,073,177
14,743,827
(5,875,109)
310,065
203,809
(514,626)
(338,622)
169,737,405
(129,044)
(131,195)
31,923,849
69,428
NONOPERATING REVENUES (EXPENSES)
State appropriations
Federal appropriations
Gifts and grants
Interest income
Endowment income
Interest on capital asset related debt
Other nonoperating revenues
Gain/loss on disposal of capital assets
Refunds to grantors
Facilities and administrative remittances to the State
Net nonoperating revenues
Income before other revenues, expenses, gains or losses
State capital appropriations
Capital grants and gifts
Additions to permanent endowments
Increase in net position
27,470
203,866
(28,903)
9,612,190
21,945,230
2,710,165
66,191,434
69,428
1,050,990,667
$1,117,182,101
10,277,316
NET POSITION
Net position, beginning of year
Net position, end of year
$10,346,744
15
Statement Highlights
• Classified format
• Operating section
– Revenues displayed net of discount
– Expenses displayed
• Function or natural class
• Nonoperating revenues, gains or losses
• Capital revenues, gains or losses
Unique C&U Issue
• Scholarship discounts and allowances
(ask Dr. Farley about this!
• Releasing of restrictions
– That is, the expiration of imposed restrictions
– Specific identification
– Public institutions record transactions within
restricted account (Private institutions must
reclass I.e., increase one class of net
assets and decrease another reported as a
separate item on financial statement)
16
The third required statement is the
Statement Of Cash Flows
Statement of Cash Flows
• Recognition and reporting details
discussed in the Cash Flow session
– Including:
• How the information is displayed in the
statement
• An explanation of how the information is
used
• The various concerns and required
disclosures
17
Disclosures
•
•
•
•
•
Significant policies Note 1 p 37-41
Definition of net asset classes Note 1 (GASB No. 34 and 63)
Definition of cash and equivalents Note 1 p 38 (GASB No. 9)
Capital assets definition Note 1 p 39 (GASB No. 18)
Deposits and Investment Note 2 p 42 (GASB No. 40)
–
–
–
–
–
–
Policies
Credit risks
Custodial credit risk
Concentration credit risk
Interest rate risk
Foreign currency risk
• Notes, loans and accounts receivable Note 3 p 43 (GASB No. 37)
• Capital assets by type and amount Note 4 p 45 (GASB No. 34)
Disclosures continued
• Accounts payables and liabilities Note 6 p 35 (GASB
No. 37)
• Long-term liabilities Note 11 p 54 (GASB No. 34)
• Segments Clemson University has two p 64
– Lets discuss more on this later
• Funds held by others Note 5 p 45 (GASB No. 62)
• Pension and OPEB Notes 8 - 10 p 51 - 54
• Natural Classification of expenses Note 17 p 59
(optional)
• RSI – Statistical section of expenses, revenues,
ratios and demographic information p 70-85
18
Segment Definition
• An identifiable activity with a specific
identifiable revenue stream pledged in
support of revenue bonds or other revenuebacked debt GASB 34 ¶134
• Has identifiable related expenses, gains
and/or losses, assets and liabilities
• Disclosure required if debt covenant
requires financial statements (GASB 37
amendment)
Segment General Rule
• Can have debt without a segment
• Can not have segment without debt
– Identifiable revenue stream pledged to debt
– Identifiable revenues, expenses, assets
and liabilities
– Debt covenant requires financial statement
19
Other Items of Interest
• Pension Accounting and Financial
Reporting revision GASB Nos. 67 and 68
effective FY 14 and FY 15
• Bankruptcy guidance GASB No. 58 (only
about 8 per year)
• Public Combinations – GASB 69
• Statement No. 61 (Reporting Entity)
Reexamination amended GASB No. 14
• Recognition and Measurement Attributes –
Conceptual Framework
• Financial Instruments Omnibus GASB No.
59
39
Learning Assessment
• What sections do public colleges include
in their annual financial report?
• Are all sections audited?
• What is the difference between exchange
and nonexchange transactions?
• What are net assets? What is included in
each type of net asset?
• Why did University of Kentucky not
recognize any endowment pledges?
20
Questions?
Thank you !
21