Gestring, SHEEO, 2003 1

SHEEO Professional Development Conference

South Lake Tahoe, CAAugust 14 – 16, 2003

Gestring, SHEEO, 2003 2

SHEEO Professional Development

Sheila K. Gestring, CPAChief Financial OfficerFlathead Valley Community College777 Grandview DriveKalispell, MT 59901(406) 756-3808www.fvcc.mt.cc.edu

Gestring, SHEEO, 2003 3

GASB 34/35, 39Lost & Found

“Opportunities”

Gestring, SHEEO, 2003 4

GASB 34/35 Issuance of GASB 34 represents the

most significant change in governmental financial reporting in over a decade

GASB 35 brought those changes to colleges and universities.

Gestring, SHEEO, 2003 5

NACUBO & Staff NACUBO and it’s staff have proven to

be a fabulous resource They have been our leaders in

providing training and guidance

Gestring, SHEEO, 2003 6

Governing Boards & Audit Committees

Increased responsibilities in publicly traded companies

Colleges and Universities can anticipate similar increased responsibilities

Gestring, SHEEO, 2003 7

Ultimate Oversight Governing Boards/Audit Committees have

ultimate oversight of the financial reporting. Management is responsible for any “abuses” Boards/Audit Committees responsible for

having a thorough understanding of the financial statements and related accounting policies.

Should be able to explain to stakeholders

Gestring, SHEEO, 2003 8

The Connection Governing Boards/Audit Committees have

read the old format financial statements for several years

Changes as a result of GASB 34/35 are complex and numerous

Need to provide our Boards/Audit Committees with enough information about GASB 34/35 to be able to read the financial statements effectively and ask the tough questions

Gestring, SHEEO, 2003 9

What is Lost is Not Entirely Lost

Fund sources are no longer displayed on the face of the financial statements

Funds that are designated can be discussed in both the MD&A and the notes to the financial statements Plant Funds Appropriations (not operating revenues, but a

large part of the funding used to support general operation expenses)

Gestring, SHEEO, 2003 10

Key Elements of the Financial Statements

Management Discussion and Analysis (MD&A)

Statement of Net Assets Statement of Revenues, Expenses,

and Change in Net Assets Statement of Cash Flows Notes to the Financial Statements

Gestring, SHEEO, 2003 11

Management Discussion and Analysis (MD&A)

GASB 34, paragraph 11 Analyze significant changes and

assess reasons for changes (not just a % change)

Overall financial position – improving?

Gestring, SHEEO, 2003 12

Management Discussion and Analysis (MD&A) – cont.

Opportunity to explain the financial statements and the operations that affect the financial statements. Objective (the good and bad) Easy to read - Laymen’s terms, and

charts and graphs Known facts only Not a transmittal letter

Gestring, SHEEO, 2003 13

Statement of Revenues, Expenses and Change in Net

Assets Public colleges & universities will report

operating losses Appropriations are non-operating revenues Tuition and fees revenue – net of

scholarship discounts and allowances Defining operating and non-operating

revenues

Gestring, SHEEO, 2003 14

Statement of Net Assets Current and Non-current Assets and

Liabilities (some assets & liabilities will be both current and non-current)

Accumulated depreciation could have a large impact on net assets category, “Invested in capital assets, net of related debt (what used to be fund balance)

Infrastructure now capitalized

Gestring, SHEEO, 2003 15

Statement of Net Assets (cont.)

3 classes of net assets: Invested in capital assets, net of related

debt Restricted

Expendable Non-Expendable

Unrestricted

Gestring, SHEEO, 2003 16

Statement of Cash Flows Direct method Reconciles net operating income/(loss) to cash

flows provided/(used) from operating activities 4 sections

Operating Non-capital Financing Capital and Related Financing Investing

Gestring, SHEEO, 2003 17

Notes to the Financial Statements

Capital Assets(in thousands)

Beginning Balance Additions Retirements

Ending Balance

Equipment 5,000$ 750$ 5,750$ Buildings and Building Improvements 32,000$ 1,000$ 800$ 32,200$ Land and Land Improvements 3,000$ 3,000$ Infrastructure 1,500$ 70$ 1,570$ Total 41,500$ 1,820$ 800$ 42,520$

Less: Accumulated DepreciationEquipment 2,500$ 572$ 3,072$ Buildings and Building Improvements 8,000$ 825$ 800$ 8,025$ Land and Land Improvements 100$ 100$ Infrastructure 500$ 79$ 579$ Total Accumulated Depreciation 11,100$ 1,476$ 800$ 11,776$

NET CAPITAL ASSETS 30,400$ 344$ -$ 30,744$

Gestring, SHEEO, 2003 18

Notes to the Financial Statements (cont.)

Long-Term Liabilities

(in thousands)Beginning Balance Additions Retirements

Ending Balance

Current Portion

Leases & Bonds Payable: Lease Obligations -$ 75$ -$ 75$ 2$ General Obligation bonds payable 3,600$ -$ 450$ 3,150$ 200$ Total Leases & Bonds Payable 3,600$ 75$ 450$ 3,225$ 202$

Other Long-Term Liabilities:Compensated Absences 20$ 2$ 3$ 19$ 2$ Total Other Long-Term Liabilities 20$ 2$ 3$ 19$ 2$

Total Long-Term Liablitiles 3,620$ 77$ 453$ 3,244$ 204$

Gestring, SHEEO, 2003 19

Notes to the Financial Statements (cont.)

Functional to Natural Classification of Expenditures Matrix

PROGRAM Personal Services Travel Contractual

Supplies & non-

capitalized equip

Grants & Subsidies Other Deprec Total

(In Thousands)Instruction $ 8,000 $ 45 $ 100 $ 50 $ 15 $ 3 $ 8,213 Research $ - $ - $ - $ - $ - $ - $ - Public Service $ 150 $ 30 $ 50 $ 5 $ - $ - $ 235 Academic Support $ 500 $ 15 $ 35 $ 15 $ - $ - $ 565 Student Services $ 800 $ 45 $ 55 $ 60 $ - $ - $ 960 Institutional Support $ 2,500 $ 100 $ 600 $ 45 $ - $ - $ 3,245 Operations & Maintenance of Plant $ 115 $ 1 $ 25 $ 50 $ - $ - $ 191 Scholarships & Fellowships $ - $ - $ - $ - $ - $ - $ - Auxiliary Enterprises $ 750 $ 5 $ 100 $ 250 $ - $ - $ 1,105 Other Transfers & Add/(Deduct) $ - Depreciation (Unallocated) $ 750

TOTAL 12,815$ 241$ 965$ 475$ 15$ 3$ 750$ 15,264$

DISCLOSURE OF PROGRAM EXPENDITURES RECONCILED TO NATURAL CLASSIFICATIONSMATRIX OF CONDENSED STATEMENT OF EXPENDITURES

FOR FISCAL YEAR ENDED JUNE 30, 2002

Gestring, SHEEO, 2003 20

Notes to the Financial Statements (cont.)

Segments Designated Funds

Gestring, SHEEO, 2003 21

Questions and Experience Sharing

What are various organizations currently doing?

Gestring, SHEEO, 2003 22

Resources http://www.gasb.org/repmodel/index.html

Click on “Implementers of Statement 34” Click on “Colleges & Universities”

NACUBO http://www.fvcc.mt.cc.edu