no slide title - wacubo mgmt institute/2016 handouts... · how does your campus’ differ? 23 what...

1

UNDERSTANDING COLLEGE AND UNIVERSITY

ACCOUNTING

AN INTRODUCTION FOR

NON-ACCOUNTANTS

2016

Joyce Lopes

Vice President of Administration

Humboldt State University

1

Learning Objectives

• After completing this course, you will be able to

– Identify the various fund types utilized by

colleges and universities

– Understand the purpose and function of these funds

– Recognize the basic financial statements

– Describe basic differences in financial reporting for private and public institutions

– Hold your own at the next board meeting

MAJOR TOPICS

• Fund accounting concepts

• Chart of accounts

• Fund accounting groups

– Current/Non-current/Other funds

• Differences in public and private financial

statements

• Review of financial statements

3

2

CONCEPTS AND DEFINITIONS

4

CHARACTERISTICS OF Not For Profit ORGANIZATIONS

5

BUSINESS NOT FOR PROFIT

Individuals own it YES NO

People give money and YES NOexpect products andservices in return

Profit is primary YES NOpurpose

Business NFP

Individuals own it YES NO

Customers give money; YES NOexpect products andservices in return

Profit is primary YES NOpurpose

Profit

Profit = Net Income

Net Income = Revenues – Expenses

Can a NFP make a profit (have positive net income)?

3

College/University:7

Resources Received

Resources Used

Revenues –Expenses =

Change in Net Assets (aka Fund Balance)

ACCOUNTABILITY

For Profit: Bottom line

University: Efficient and effective use of resources and monies for

stated purposes

8

FUND ACCOUNTING

Classify financial resources for

accounting and financial

reporting purposes in

accordance with their intended

use or purpose.

9

4

FUND ACCOUNTING

• Although no longer required by GAAP, fund accounting:

– Can assist with financial reporting

– Is an effective way to manage an institutions

resources

– Will probably be around for a while

10

FUND

• Fiscal and accounting entity

• Self-balancing set of accounts

• Defined by

– specific activities, or

– certain objectives, or

– special regulations, restrictions,

limitations

11

Self-balancing

12

AssetsLiabilitiesNet Assets

5

ASSETS - LIABILITIES = NET ASSETS

• Assets

– Cash and Cash Equivalents

– Accounts Receivable

– Inventory

– Investments

– Plant, i.e. buildings, equipment

– Other

• Liabilities

– Accounts Payable

– Deferred Revenue

– Notes Payable

– Bonds Payable

13

What are Net Assets?

• Funds retained by the organization for reinvestment into the enterprise

15

Restrictions on use

Resources Received

Resources Used

LIMITATIONS

6

LIMITATIONS ON USE

Donor Federal Institution

& State

16

$$$

LIMITATIONS ON USE

RESTRICTED DonorExternal entityFederal & state

UNRESTRICTED Institution

17

$$$

WHAT IS “RESTRICTED”Public Colleges & Universities

LIMITED BY RESTRICTED

Donor YES

External entity YES

Federal, state YES

Institution NO, but may

designate or allocate

18

7

19

WHAT IS “RESTRICTED”Private Colleges & Universities

Limited by DONOR only Restricted

In perpetuity Yes-permanently restricted

Until passage of time or Yes-temporarily restricted

occurrence of event

No donor limitation No-unrestricted

QUICK SUMMARY

• Fund Accounting for NPO’s

• Resources-based model

• Funds may have limitations on use

20

FUND ACCOUNTING

21

8

CHART OF ACCOUNTS

• Blueprint of financial structure

• Used to classify financial transactions

• Identifies fund group, function, organizational unit, ledger, etc.

• Important to internal management and external

reporting

22

Typical Account String

• Fund-Department-Account-Program-Activity-Location

• This is one example…

110000-521001-69010-1600

How does your campus’ differ?

23

What is Fund Accounting?

Fund accounting is the procedure by which resources for various purposes are classified by accounting and reporting purposes in accordance with activities or objectives as specified by donors, in accordance with regulations, restrictions, or limitations imposed by sources outside the institution, or in accordance with directions issued by the governing board.

AICPA Audits of Colleges and Universities Industry Audit Guide

24

9

What does that mean?

Fund Accounting is a convenient way to organize/compartmentalize various resources to facilitate

(1) the management of those resources, and

(2) the required reporting for those resources

Ok…

So what does it look like?

FUND GROUPS

• A way to organize funds within the chart of accounts based upon classification and restrictions

27

10

Audit Guide Fund Groups

• Unrestricted Current Funds

• Restricted Current Funds

• Loan Funds

• Endowment and Similar Funds

• Plant Funds

• Other Funds

28

FUND CLASSIFICATIONS

• Ownership vs. agency

• Restricted vs. unrestricted

• Expendable vs. non-expendable

29

Fund Groups

30

General Funds

Designated Funds

Restricted Funds*

Auxiliary Enterprises

Current Funds

Financial Aid

Internal Agency*

External Agency*

Other Funds

Loan Funds

Endowment Funds

Plant Funds

Noncurrent Funds

*Indicates fund classifications

11

Unrestricted Current Funds

31

Fund Groups

32

General FundsGeneral Funds

Designated FundsDesignated Funds

Restricted Funds

Auxiliary EnterprisesAuxiliary Enterprises

Current Funds

Financial Aid

Internal Agency

External Agency

Other Funds

Loan Funds

Endowment Funds

Plant Funds

Noncurrent Funds


Economic resources of the institution which are expendable for any purpose in performing the primary objectives of the institution

33

12


Typically include instruction, research, and public service;

And those funds which have been designated by the governing board for other purposes.

34


• General Funds

• Designated Funds– Continuing Education

– Public Service

– Internal Research

– Other

– Unrestricted Scholarships

• Auxiliary Enterprise Funds– Auxiliary

– Recharge Centers

– Hospitals

35

What is an Auxiliary?

An enterprise that furnishes goods or services to students, faculty, or staff and charged a fee directly related to, although not necessarily equal to, the cost of the goods or services. Basically, an entity managed as a self-supporting activity.

36

13

What is a Recharge Center Fund?

An operation that furnishes goods or services to other internal university departments and charges a fee directly related to, and equal to, the cost of the goods or services. Basically, an activity managed as a self-supporting operation that is not intended to make a profit.

37

Examples of Auxiliary and Recharge Activities• Athletics

• Residence halls

• Student unions

• Parking and transportation

• Bookstores

• Copy center

38

Unrestricted Current Funds –Sources

• State Appropriations

• Student Fees

• Sales and Services

– Academic, Auxiliary & Service

• Recovery of Indirect

Cost

• Interest Gifts

• Rent, Dividends & Royalties

• Endowment Income – if unrestricted

• Transfers In

39

14

Unrestricted Current Funds –Uses

– Salaries, Wages & Benefits

– Supplies & Expense

– Travel

– Capital Expenditures

– Note Payments (lease purchases)

– Interest Expense (lease purchases)

– Transfers Out

40

Unrestricted Current Funds –Assets

• Cash

• Investments

• Accounts Receivable

• Inventories

• Prepaid Expenses

• Due from Other Funds

• Notes Receivable

41

Unrestricted Current Funds –Liabilities

• Accounts Payable

• Salaries Payable

• Accrued Vacation Liability

• Deferred Revenue

• Due to Other Funds

• Notes Payable

42

15

Restricted Current Funds

43

Fund Groups

44

General Funds

Designated Funds

Restricted Funds


Current Funds

Financial Aid

Internal Agency

External Agency

Other Funds

Loan Funds

Endowment Funds

Plant Funds

Noncurrent Funds


Those funds expendable for operating purposes but restricted by donors or other outside agencies as to the specific purpose for which they may be expended.

45

16

RESTRICTED REVENUE

46

$100 $40$60

Cash Received Spent

TemporarilyRestricted Revenue

UnrestrictedExpenses

Temporarily RestrictedUntil Expended

Not Yet Spent


• Other Restricted

– Fellowships

– Scholarships

– Special State Appropriations

• Contract and Grants

– By agency type, I.e. federal, state, foundations,

etc.

– Cost Share

47

Restricted Current Funds -Sources

• Sales & Services (Program

Income)

• Interest & Gains

• Gifts

• Grants & Contracts

• Endowment Income

• Other Income (program income)

• Transfers In

48

17

Restricted Current Funds –Uses

• Matching Expenditures

– Salaries, Wages & Benefits

– Supplies & Expense

– Travel

– Indirect Cost Recovery

– Capital Expenditures

– Note Payments (lease purchases)

– Interest Expense (lease purchases)

– Transfers Out

49

Restricted Current Funds –Assets

• Cash

• Investments


• Inventories

• Prepaid Expenses

• Due from Other Funds


50

Restricted Current Funds –Liabilities


• Salaries Payable

• Deferred Revenue

• Due to Other Funds

• Notes Payable

51

18

Loan Funds

52

Fund Groups

53

General Funds

Designated Funds

Restricted Funds


Current Funds

Financial Aid

Internal Agency

External Agency

Other Funds

Loan Funds

Endowment Funds

Plant Funds

Noncurrent Funds

Loan Funds

The loan funds group consists of loans to students, faculty, or staff, and of resources available for such purposes.

54

19

Loan Funds

• Gift Agreements specify revolving

• Many are temporary and require repayment of principal & interest

• Some specify forgiveness of repayment under certain conditions

• Specific restrictions can exist

– Geographic

– Financial status

55

Loan Funds – Sources

• Interest

• Gifts

• Endowment Income

• Other Sources

– Government advances

• Transfers In

56

Loan Funds – Uses

• Student Loan Expenditures

– Collection fees

– Write-offs of loans

– Administrative collection costs

– Refunds to grantors

• Transfers Out

57

20

Loan Funds - Assets

• Cash

• Investments – temporary

• Due from other Funds


– Face value

– Allowance for doubtful loans

58

Loan Funds - Liabilities


– amounts due collection agencies for fees

– Refundable loan amounts

59

Endowment and Similar Funds

60

21

Fund Groups

61

General Funds

Designated Funds

Restricted Funds


Current Funds

Financial Aid

Internal Agency

External Agency

Other Funds

Loan Funds

Endowment FundsEndowment Funds

Plant Funds

Noncurrent Funds

Endowment and Similar Funds

• Endowment Funds

• Term Endowment Funds

• Quasi-endowment Funds

• Annuity and Life Income Funds

62

Endowment Funds

Endowment funds are funds to which donors or other outside agencies have stipulated, as a condition of the gift instrument, that the principal is to be maintained inviolate and in perpetuity and invested for the purpose of producing present and future income which may either be expended or added to principal.

63

22

Term Endowment Funds

Term endowment funds are similar to endowment funds except that, upon the passage of a stated prior of time or the happening of a particular event, all or a part of the principal may be expended.

64

Quasi-endowment Funds

Sometimes called funds functioning as endowments, quasi-endowments are funds which the governing board of an institution, rather than a donor or other outside agency, has determined are to be retained and invested. Because they are internally designated, the governing board has the right to decide at any time to expend the principal.

65

Annuity and Life Income Funds

Funds contributed to an institution subject to the requirement that the institution periodically pay the income earned on the assets to designed beneficiaries.

66

23

Annuity and Life Income Funds

• Received under deferred giving agreements

• Income to donor or designee

– lifetime or fixed period

• When contract expires, funds used as

designated by donor

67

WHAT CAN BE SPENT?

Created

by

Principal

Spent

Income

Spent

Endowment Donor No Yes

Term

Endowment

Donor Yes-after period of

time or event

Yes

Quasi-endowment

Board Yes Yes

68

Endowments and Similar Funds –Sources

• Interest & Gains

– Losses

• Gifts

• Other Income

– Income from Asset – Farm Activity, Rental,

etc.

• Transfers In

69

24

Endowments and Similar Funds –Uses

• Supplies & Expense

– Payouts on life income funds

• Transfers Out

70

Endowments and Similar Funds –Assets

• Cash

• Investments

71

Endowments and Similar Funds - Liabilities

• NONE

The mission of these funds is to make money, not spend it. Therefore, there tends to be no

liabilities since there are no deductions.

72

25

Endowments and Similar Funds

• Governed by Uniform Prudent Management of Institutional Funds Act (UPMIFA)

• Spending Policy

• Investment Policy

73

Plant Funds

74

Fund Groups

75

General Funds

Designated Funds

Restricted Funds


Current Funds

Financial Aid

Internal Agency

External Agency

Other Funds

Loan FundsLoan Funds

Endowment Funds

Plant FundsPlant Funds

Noncurrent Funds

26

Plant Funds

• Unexpended

• Retirement of Indebtedness

• Renewal and Replacement

• Investment in Plant

76

Plant Fund Definitions

• Unexpended Plant

– Funds for acquisition of physical plant

– Sometimes called Construction

• Retirement of Indebtedness

– Indebtedness incurred for plant expansion

77

Plant Fund Definitions -continued

• Renewal & Replacement

– Funds set aside for replacement of renewable property

• Investment in Plant

– Location of all assets that have been capitalized, construction in progress

and related debt

78

27

Construction - Sources

• Additions

– State Appropriations

– Interest & Gains

• Losses

– Gifts

– Grants – federal and state

– Bond Revenue

– Transfers In

79

Construction - Uses

• Supplies & Expenditures

• Expendable equipment

• Capital Expenditures

• Predominantly building

capitalization

• Transfers Out

80

Construction – Assets

• Cash

• Investments


• Prepaid Expense


81

28

Construction – Liabilities


• Due to other Funds

• Notes Payable

• Bonds Payable

82

Retirement of Indebtedness –Sources

• Interest and gains

– Losses

• Gifts

• Grants

• Transfers In

83

Retirement of Indebtedness -Uses

• Supplies & Expense

– Trustee’s fees and expenses

• Note Payments

• Bond Payments

• Interest Payments

84

29

Retirement of Indebtedness -Assets

• Cash

• Investments

• Funds on deposit


• Due from other funds

• Notes receivable

85

Retirement of Indebtedness -Liabilities

• NONE

Retirement of Indebtedness usually does not have any liabilities. Predominantly this is true

because there are no operating expenditures involved in the fund group, nor any long term

debt.

86

Renewal and Replacement Funds – Sources

• Interest and gains

– Losses

• Gifts

• Grants

• Transfers In

– Mandatory

– Voluntary

87

30

Renewal and Replacement Funds - Uses

• Supplies and Expense

– Expendable Equipment

– Maintenance of R&R Items

• Capital Expenditures

• Transfers Out – very seldom

88

Renewal and Replacement Funds - Assets

• Cash

• Investments

• Funds on Deposit



89

Renewal and Replacement Funds – Liabilities


• Due to other Funds

90

31

Investment in Plant – Sources

• NONE

There is no revenue in Investment in Plant because there is no cash activity. Only the

recognition of new plant capitalized occurs in the balance sheet assets.

91

Investment in Plant – Uses

• NONE

There is typically no expenditure in Investment in Plant. The only exception

is depreciation expense when it is recognized in plant funds.

92

Investment in Plant - Assets

• Capital Assets

– Land

– Buildings

– Moveable Equipment

– Cataloged Library Acquisitions

– Improvements to Land

– Infrastructure

• Accumulated Depreciation

93

32

Investment in Plant – Liabilities

• Notes Payable

• Bonds Payable

Only debt that relates to (matches) the

capital asset items

94

Other Funds

95

Fund Groups

96

General Funds

Designated Funds

Restricted Funds


Current Funds

Financial Aid

Internal Agency

External Agency

Other Funds

Loan FundsLoan Funds

Endowment Funds

Plant FundsPlant Funds

Noncurrent Funds

33

Other Funds

• External Agency

• Internal Agency

• 3rd party financial aid (private only)

97

Agency Funds

Funds held by an institution as custodian or fiscal agent for others such as student organizations, individual students, or faculty members.

98

Financial Aid – FASB Schools

Note: For private institutions, Pell grants and 3rd party financial aid directed toward specific students are shown as Agency transactions.

99

34

Internal Agency Funds

• Temporary Holding Accounts

• Examples:

–FICA

–Federal Taxes

–State Taxes

• Reported as Unrestricted assets and liabilities at the end of the fiscal year (typically June 30)

100

External Agency Funds

• Relationship with University mission

• Usually there is an agreement to sponsor

• Reimbursement to university

• Never reported as university resources

101

External Agency Funds

• Enhance institution’s mission

– Federally-funded research labs

– Software production corporation

– Alumni associations

– Foundations

– University press

102

35

Higher Education Function Codes

103

What are function codes needed for ?

• IPEDS reporting

• Facilities and Administrative Rate

• Internal management of how dollars are spent

• Some states require reporting by function

• Institutions can report expenses in the operating statement by function instead of natural classification

104

Educational and General Function Codes

• Instruction• Research• Public Service• Academic Support• Student Services• Institutional Support• Operation and Maintenance of Plant• Scholarships and Fellowships

105

36

EDUCATIONAL AND GENERAL

INSTRUCTION

• General Academic

• Vocational/Technical

• Continuing Education

• Remedial

106


RESEARCH

• Individual

• Project

• Institutes and research centers

NOT equivalent to sponsored research

107


PUBLIC SERVICES

• Community service

• Cooperative extension services

• Public broadcasting services

–not primarily instructional

108

37


ACADEMIC SUPPORT

• Libraries

• Museums and galleries

• Educational media

• Academic computing

Cont’d

109


ACADEMIC SUPPORT Cont’d

• Ancillary support

• Academic administration

• Academic personnel development

• Course and curriculum development

110


STUDENT SERVICES

• Student services administration

• Financial aid administration

• Student records

• Admissions

Cont’d111

38


STUDENT SERVICES, con’t

• Counseling and career guidance

• Social and cultural development

• Student health services

112


INSTITUTIONAL SUPPORT

• Executive management

• Fiscal and business operations

• General administration and logistical services

• Administrative computing

• Public relations/development113


OPERATION AND MAINTENANCE OF PLANT

• Physical plant administration (and planning)

• Building maintenance

• Custodial services

• Utilities114

39


OPERATION AND MAINTENANCE OF PLANT

• Landscape and grounds maintenance

• Major repairs and renovations

Note: Not an expenditure category for private, must allocate out to all other functions.

115


SCHOLARSHIPS AND FELLOWSHIPS

• Grants

• Trainee stipends

• Prizes and awards

• Tuition and fee waivers

NO exchange of services, used as directed by donor

116

FINANCIAL REPORTING

117

40

Purpose

To provide financial information useful

for making rational decisions to

allocate resources.

118

Who are the users of financial statements?

• Federal Government

• State Government

• Private Sponsors

• Media

• Analysts

• Rating Agencies

• Colleges & Universities

What are the objectives?

• Assess financial condition and results of operation

• Assist in determining compliance with laws and regulations

• Assist in evaluating efficiency and effectiveness

120

41

GASB/FASB Comparability Challenges

• Display differences exist with the reporting

models established by GASB and FASB

• The Accounting Principles Council and academic researchers have initiated analysis of reporting

and standard inconsistencies

• The inconsistencies impact financial statement comparability between public and private

institutions

121

Prominent FASB/GASB Differences

• Pell Grants

– FASB – Agency recognition i.e., funds held for others

– GASB – Revenue

• Recognition of Pledges

– Discounting of operating pledges FASB yes GASB no

– Recognition of endowment pledges FASB yes GASB no

• Reporting of restricted revenues

– FASB – Mandates first dollar release method

– FASB – Only donors can restrict

– GASB – Any external party can restrict

122


• Time Restrictions

– FASB – Time and purpose are restrictions

– GASB – Time is a condition, not a restriction (result is deferred revenue)

• OPEB

– FASB – Accrues a liability

– GASB – Also accrues liability but with different assumptions and funding not required

• Cash Flow

– FASB – Direct or indirect method, three categories

– GASB – Direct method mandatory, four categories

123

42


• Split Interest Agreements– FASB – Current guidance in the Not-for-Profit

Audit Guide

– GASB – Single Q&A Answer

• Funds held in trust by others– FASB – Reported as an asset

– GASB – Not reported unless as a component

unit

124


• Display– FASB – must allocate depreciation, three net

asset groups not consistent with GASB,

unclassified balance sheet, MD&A and operating measure are not required

– GASB – no requirements to allocate

depreciation, three net asset groups not consistent with FASB, classified balance sheet,

mandatory operating measure, mandatory

MD&A125

Consequences of GASB/FASB Differences

• Misinterpretation by statement users

• Comparisons between public and private statements difficult if not impossible

• Financial analysis significantly different

– Ratios, Vertical analysis, Horizontal Analysis,

etc.

• Debt rating agencies’ analysis and conclusions

126

43

BASICS OF ALL COLLEGES &

UNIVERSITIES FINANCIAL STATEMENTS

127

MEASUREMENT FOCUS AND BASIS OF ACCOUNTING

• Financial statements should be presented using the economic resources measurement and the accrual basis of accounting.

128

ECONOMIC RESOURCES

• Economic resources measurement focus, essentially full commercial accounting with depreciation of capital assets and utilization of the effective interest rate for the recognition of long-term debt obligations

129

44

BASIS OF ACCOUNTING

• “Basis of accounting” refers to when revenues, expenditures, expenses, and transfers--and the related assets and liabilities--are recognized in the accounts reported in the financial statements.

130

ACCRUAL BASIS

• Revenues should be recognized in the accounting period in which they are earned and become measurable; expenses should be recognized in the period incurred, if measurable.

Vs.

• Cash basis – revenues and expenses are recognized when cash is exchanged

131

FINANCIAL STATEMENTS FOR PUBLIC COLLEGES &

UNIVERSITIES (GASB)

132

45

BUSINESS TYPE ACTIVITIES FINANCIALS

• Present only those financial statements and RSI

required for enterprise funds (GASB 34 & 35)

– MD&A (RSI)

– Statement of Net Assets

– Statement of Revenues, Expenses, and Changes in Net Assets

– Cash Flow Statement

– Notes to the Financial Statements

– Other RSI

133

Statement of Net Assets (Balance Sheet)

134

STATEMENT OF NET ASSETS

• Assets and liabilities should be presented in a classified format to distinguish between current and long-term assets and liabilities

• May use either a net assets format-assets less liabilities equal net assets-or a balance sheet format-assets equal liabilities plus net assets

135

46


• Net assets should be displayed in three broad components—invested in capital assets, net of related debt; restricted (distinguishing between major categories of restrictions); and unrestricted.

136


• When permanent endowments or permanent fund principal amounts are included, “restricted net assets” should be displayed in two additional components—expendable and nonexpendable. Nonexpendable net assets are those that are required to be retained in perpetuity.

137


• Capital contributions should not be displayed as a separate component of net assets.

• Designations of net assets should not be reported on the face of the financial statements.

138

47

STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET

ASSETS (SRECNA)

139

SRECNA

• Operating statement for proprietary funds/enterprise funds/business type activity

• Revenues should be reported by major source and should identify revenues used as security for revenue bonds

• Should distinguish between operating and nonoperating revenues and expenses

140

SRECNA

• Should present a separate subtotal for operating revenues, operating expenses, and operating income

• Nonoperating revenues and expenses should be reported after operating income

141

48

SRECNA

• Revenues from capital contributions and additions to the principal of permanent and term endowments, special and extraordinary items, and transfers should be reported separately, after nonoperating revenues and expenses

142

SRECNA

• Revenue recognition of capital contributions, additions to permanent and term endowments and all other nonexchange revenues should be based on the requirements of GASB33, Accounting and Financial Reporting for Nonexchange Transactions

• Restricted net assets should be separated into expendable and nonexpendable

143

EXPENSES

• May be displayed using either natural or functional classification

• Many schools voluntarily provide both, one on face of statements and the other in the notes

– This is not required

• Must distinguish between operating and nonoperating

144

49

CASH FLOW STATEMENT

145

CLASSIFICATIONS

• Operating Activities

• Noncapital Financing Activities

• Capital and Related Financing Activities

• Investing Activities

146

OPERATING ACTIVITIES

• Direct reporting method prescribed

• Accrual data must be converted into cash basis. A reconciliation [indirect method] of this conversion must be presented at the bottom of the statement

• Inflows reported by major type

• Outflows reported by payment type

147

50

NOTES TO THE FINANCIAL STATEMENTS

148


• Integral part of the basic financial statements

• Communicates information that is essential for a fair presentation of the financial statements not displayed on the face of the financial statements (GASB 34, p.39, ¶113)

149

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

• Measurement focus basis of accounting used• Definition of cash equivalents• Codification of applicable FASB

pronouncements • Asset capitalization policy together with asset’s

useful lives• Defining operating and non operating revenues • Policy regarding the use of restricted or

unrestricted resources when an expense is incurred when both unrestricted and restricted net assets are available

150

51


• Capital assets and long-term liabilities reported by major class

• Capital assets and long-term liabilities reported in SRECNA– Major classes

– Grouped by depreciable/non depreciable assets

• Capital acquisitions/dispositions

151


• Beginning/end of the year balances with separate accumulated depreciation

• Current year depreciation with amounts allocated to each program, if any

• Provide description of collections• Explanation of the collection assets not

capitalized

152

LONG-TERM LIABILITIES

• Bonds, notes, loans, lease, payable and compensated absences, claims and judgements

• Beginning/end of the year balances

• Increases/decreases

• Current year obligation displayed as a separate column

153

52

ENDOWMENTS - DONOR RESTRICTED

• Amount of net appreciation available for expenditure

• How are these amounts reported in net assets

display

• Law regarding ability to spend net appreciation

• Policy for authorizing and spending investment

income (GASB 34, p.42, ¶121),

– Spending-rate

– Total-return policy

154

SEGMENT INFORMATION(only if data required by bond holder)

• Types of goods or services provided by the

segment

• Identifiable activity pledged for revenue bonds

by each segment

• Condensed statements (GASB 34, p.42, ¶122)

– SNA

– SRECNA

– Statement of Cash Flows

155

MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A)

156

53

MD&A

• The basic financial statements should be preceded by MD&A (RSI)

• MD&A is required supplementary information and therefore is subject to a lower level of audit than the financial statements and the notes

• MD&A should provide an objective and easily readable analysis of the financial activities based on currently known facts

157

COMPARATIVE ANALYSIS -FUTURE

• Comparison of current-year results to prior year

• Emphasis should be on current-year

• Both positive and negative results should be discussed

• Although not mandatory, graphs, charts and tables are encouraged.

• GASB 34, p. 6, ¶9

158

MD&A REQUIREMENTS

• General rather than specific

• Report only the most relevant information

• Avoid “boilerplate” discussion

• A brief discussion of the basic financial statements

• How the financial statements relate to each other

• Significant differences in the data

• Data provided should reinforce analysis and results of operations

159

54

MD&A MINIMUM REQUIREMENTS

• Total assets, distinguishing between capital and other assets

• Total liabilities, distinguishing between long-term liabilities and other liabilities

• Total net assets, distinguishing

– Invested in capital assets, net of related debt

– Restricted amounts

– Unrestricted amounts160


General Revenues, by major source

• Total Revenues

• Total Expenses

• Excess before contributions to

– Term and permanent endowments

– Permanent fund principal

– Special and extraordinary items

– transfers

161


• Contributions

• Special & Extraordinary Items

• Transfers

• Change in Net Assets

• Ending Net Assets

162

55

MD&A MINIMUM REQUIREMENTS – FINANCIAL

POSITION• Overall financial position and results of

operations to assist in assessing whether financial position has improved or deteriorated

• Reasons for significant changes from prior years

• Important economic factors that significantly affected operating results

163

MD&A MINIMUM REQUIREMENTS – BALANCES

• Significant changes and reasons for changes in

net assets

• Significant changes and reasons for changes in

availability of funds

– Restriction changes

– Commitment changes

– Other limitations.

164

MD&A MINIMUM REQUIREMENTS – CAPITAL

• Significant Capital Asset Activity

• Significant Long-Term Debt Activity

• Capital Expenditure Commitments

• Changes in Credit Ratings

• Debt Limitations affecting Plans

165

56

MD&A ANALYSIS – KNOWN FACTS

A description of currently known facts, decisions, or conditions that are expected to have a significant effect on financial position (net assets) or results of operations (revenues, expenses, and other changes in net assets).

GASB 34, p. 8, ¶11.h

AGAIN, GASB 36, restricts MD&A to ¶11

166

Group DISCUSSION ON GASB STATEMENTS

167

Financial Statements for Private Colleges and Universities

(FASB)

• SFAS 116, 117, 124, 136 & 164

• Now part of codification

168

57

SFAS overview• SFAS #116 addresses issues of recognition &

measurement

• SFAS #117 establishes standards for general-purpose external financial statements

• SFAS # 124 established recognition for investment losses

• SFAS # 136 establishes recognition for funds held by others

• SFAS # 164 established guidance for NFP acquisitions and mergers

169

Types of StatementsStatement

Financial Position

Activities

Cash Flow

Purpose

Current Status (Balance Sheet)

Detailed Sources &Uses, Transactions

Cash Receipts & Cash

Payments

170

Statement of Financial Position

(Balance Sheet)

171

58

Minimum Requirements include

• Total amount of assets, liabilities, & net

assets

• Total amount of each class of net assets (unrestricted, temporarily restricted, permanently restricted) based on existence or absence of donor-imposed restrictions

172


• Information regarding types of restrictions

on net assets (usually in notes)

• Information regarding liquidity (e.g. by providing classified balance sheet)

173

Statement of Activities

174

59


• Amount of change in total net assets

• Amount of change in each of the 3 classes of net assets

• All revenues, expenses, gains, and losses for the period -classified by and reported in the class of net assets they affect

• Revenues reported as increases in unrestricted net assets unless their use is restricted by explicit donor stipulation or by law

175


• Expenses reported as decreases in unrestricted net assets

• Reporting expenses by function either in the statement or in the notes

• The amount of expired donor-imposed restrictions that increase one class of net assets and simultaneously decrease another class of net assets

176

Statement of Cash Flows

177

60


• Total changes in cash and cash equivalents

• Total amount of net cash provided by or used for

investing, financing, & operating activities

• Interest paid on indebtedness

• Significant non-cash financing and investing activities

• Reconciliation of change in total net assets to net cash provided by or used for operating activities

178

Notes to the Financial Statement

179

Footnotes required by SFAS 116 & SFAS 117 or

suggested as being informative:

• Summary of significant accounting policies

• Nature of restriction/limitations on net asset balances

• Net assets released from restrictions

• Expenses by classification

180

61

Footnotes required by SFAS 116 & SFAS 117 or

suggested as being informative:

• Unconditional and conditional promises to give

• Collections policies

• Appreciation of endowment investments

• Contributed services details

181

Group DISCUSSION ON FASB STATEMENTS

182

183

Hope this put the FUN into FUNd Accounting!

no slide title - wacubo mgmt institute/2016 handouts... · how does your campus’ differ? 23 what...

Documents