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College and University Issues
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| Audit and Accounting Issues |
| GASB
Project Summaries
NACUBO's Accounting and Finance Reference Page GASB News Release: GASB No. 37 and No. 38 summaries AHP summaries of selected audit and accounting issues relevant to institutions of higher education.
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GASB's current projects include:
As these and other issues are finalized by GASB, we will keep you informed about their progress and their impact on you. We are available to help you evaluate the impact these statements will have on your financial operations. We view assistance in evaluating the impact of these statements as part of our ongoing commitment to you. Detailed evaluations such as information system changes required to accumulate the information required to implement a new standard is an example of an additional service we could perform, and we would discuss arrangements for these services prior to beginning any project.
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Released in October 2000 by the Governmental Accounting Standards Board, this guide illustrates to financial statement users the valuable information contained in the annual reports of local governments. What You Should Know about Your Local Government’s Finances: A Guide to Financial Statements is the GASB’s first publication written specifically for citizens, taxpayers, legislators, researchers, and other people who use government financial information. The guide is intended not only for financial statement users, but also as a resource for auditors and government finance officers who need to explain financial statements to elected officials, citizens, and clients. Read the full GASB news release. Top of college and university Issues |
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College and University Reporting Model In November 1999, GASB issued statement of Governmental Accounting Standards No. 35 titled, Basic Financial Statements--and Management's Discussion and Analysis --for Public Colleges and Universities--an Amendment to GASB Statement No. 34. The amendment generally permits public colleges and universities, in separately issued financial statements, to use the guidance for special-purpose governments:
This applies regardless of whether or not the college or university is a legally separate entity. Under the amended guidance, a public institution, in its separately issued financial statements, would be required to include:
The new statement is effective in three phases based on a public institution’s total annual revenues, beginning with periods beginning after June 15, 2001 and continuing through periods beginning after June 15, 2003. Public institutions that are component units of a primary government should implement this standard at the same time as that primary government. The State of Michigan has elected to adopt GASB 34 for fiscal 2001. Top of college and university Issues
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The Financial Reporting Entity - Affiliated Organizations GASB Statement No. 14, The Financial Reporting Entity, established standards for defining and reporting on the financial reporting entity. The GASB subsequently issued an exposure draft of a proposed statement, The Financial Reporting Entity - Affiliated Organizations, which further defines the type of organizations that must be included in the financial statements. After reviewing preliminary responses to the proposed statement, the GASB has decided that further research is necessary regarding the relationships between primary governments and affiliated organizations. They are considering a revised definition of an affiliated organization that would result in either discrete presentation or note disclosure within the primary governments financial statements. A revised exposure draft is scheduled for release in 2001. The relationship between the College and the Foundation would need to be reviewed once a revised definition is released. We are continuing to monitor the developments in this area and will pass on any additional information we obtain.
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Accounting and Financial Reporting for Certain Grants and Other Financial Assistance GASB Statement No. 24, Accounting and Financial Reporting for Certain Grants and Other Financial Assistance, was effective for financial periods beginning after June 15, 1995. It required that as a general rule, recipient governments should recognize all cash pass-through grants as revenue and expenditures or expenses in a governmental, proprietary, or trust fund. In those infrequent cases in which the recipient government served only as a cash conduit, i.e. no administrative or direct financial involvement, it allowed the grants to be reported in an agency fund. While this Statement did not apply to colleges and universities reporting using the AICPA College Guide, it may indicate a trend in financial reporting once the governmental college and university reporting model is finalized.
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Accounting and Financial Reporting for Internal Revenue Code Section 457 Deferred Compensation Plans In October 1997, the GASB issued Statement No. 32, Accounting and Financial Reporting for Internal Revenue Code Section 457 Deferred Compensation Plans. Prior to August 20, 1996, the amounts placed in IRC Section 457 plans were considered by law to be the property of the organization sponsoring the plan. Accordingly, such plans were reported as assets and related liabilities of the organization. On August 20, 1996, the provisions of the IRC covering 457 plans were amended to require new plans to hold amounts deferred in trust for the exclusive benefit of participants and their beneficiaries. Existing plans have until January 1, 1999 to comply with this new provision. Based on this change, the proposed statement would require organizations to report their Section 457 plans only if certain criteria are met. It is anticipated that few entities will actually continue to report the assets and liabilities of these plans.
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Accounting and Financial Reporting for Nonexchange Transactions GASB Statements No. 33, Accounting and Financial Reporting for Nonexchange Transactions, is effective for years beginning after June 15, 2000. This statement will establish accounting and financial reporting standards for nonexchange transactions. In a nonexchange transaction, such as gifts and grants, the College or Foundation receive value without directly giving equal value in return. In most cases, this statement will require that the nonexchange transaction be recognized when the eligibility requirements of the transaction are met.
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Recording of State Appropriations Community colleges currently record revenue from state appropriations as revenue in the period for which they were appropriated, in accordance with the accounting method described in the Manual for Uniform Financial Reporting - Michigan Public Community Colleges. Effective for fiscal 1999-2000, the State of Michigan has changed the distribution of state appropriations to eleven equal monthly installments (October through August). The State has indicated that each institution should accrue for the July and August payments.
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