2003 cfma/csma/cima spring educational seminar

2003 CFMA/CSMA/CIMA Spring Educational Seminar

Presented by Mary Catherine Gaisbauer

Colorado Public College and University Accounting

Higher Education Session #1 - Overview


Higher Education Session #8 2

Overview of Agenda Current Funds Classifying Activity between General

Operating and Auxiliary Self-Funded Restricted/Sponsored Program Activity Plant Funds Loan and Agency Funds Revenue Recognition for TABOR

Purposes Financial Statements



Remember

Accountants aren’t boring;

we just get excited about

boring things!



Objectives of Accounting Help managers effectively allocate

and use resources Help readers accurately evaluate

financial position Assure proper application of GAAP



Key Terminology GAAP – Generally Accepted Accounting

Principles GASB – Governmental Accounting

Standards Board FASB – Financial Accounting

Standards Board AICPA – American Institute Of CPA’s



Key Terminology NACUBO – National Association of

College & University Business Officers: FARM – Financial Accounting & Reporting

Manual CUBA – College & University Business

Administration



Key Terminology State of Colorado Higher Education:

CHEASC – Colorado Higher Education Accounting Standards Committee

FAC – Financial Advisory Committee SC0 – State Controller’s Office OSA – Office of State Auditor CCHE – Colorado Commission on Higher

Education COFRS – State’s general ledger system TABOR – Tax-payer’s Bill of Rights



Operational Objectives Institutions of Higher Education--

Tuition & fees only one component of revenue

Restrictions placed on how revenues are used

Multiple missions



Resource Restrictions Resource providers often direct how

resources will be used Accountability important Purpose and time restrictions Separately monitored

What are the various types of resources you are familiar with?



Accountability

Institutions are specifically accountable for

restricted resources - compliance

Institutions are generally accountable

for

effective use of all resources



Fund Accounting Segregates Resources According

To: Sources Restrictions

A separate “accounting entity”



Fund Accounting The convention by which resources

for various purposes are classified, accounted for and reported in accordance with: Activities or objectives as specified by

donorsRegulations, restrictions, or limitations

imposed by sources outside the institution

Directions issued by the governing board



Fund Definition A fund is an accounting entity with a

self-balancing set of accounts for recording assets, liabilities, a fund balance, and changes in the fund balance

Separate accounts are maintained for each fund to insure observance of limitations and restrictions placed on the use of resources



Resource Groupings Current Operations

UnrestrictedRestricted

Loan Programs Endowment and Similar Activities Capital (Plant) Activities Agency Operations



Current Operations Near-term economic resources for

use in general operations (the mission-related activities of the institution) -- typically . . .InstructionResearchPublic serviceRelated supporting services



Current Operations Unrestricted

what does this mean?

Restrictedwhat does this mean?



Loan Programs Loans to Students/Faculty/Staff Source of funds may be either:

FederalDonorInstitutional

Revolving Basis



Endowment and Similar Activities

Resources are held and invested to produce revenue that is spent to support the institution’s programs or operations



Endowments Three Principal Categories:

True EndowmentsTerm EndowmentsQuasi-endowments

Resources Functioning as Endowments



Capital (Plant) Activities Acquisition or construction of

Long-Lived Assets Renewal and Replacement of

Existing Assets Debt Service/Retirement of Debt



Agency Accounts Institution holds resources as

custodian or fiscal agent No institutional equity – liability

equal to resources held Recorded on balance sheet



Net Assets Definition:

Institutional equityAssets less liabilitiesFund balance



Fund AccountingEven though no longer externally report funds in financial statements

as a result of GASB Statements No.

34/35

Still a Great Tool!



Net Assets Classes:

Invested in capital assets, net of related debt

Restricted for: Nonexpendable

By purpose Expendable

By purpose

Unrestricted



Designation of Net AssetsGoverning board may internally

“designate” the use of unrestricted resources



Transfers of Net Assets Transfers are either:

Mandatory Non-mandatory (voluntary)



Basis of Accounting Accrual

Revenues when earned Expenditures when material or

services are receivedEncumbrances are not reported as

expenditures or liabilities



Account Classification Structure

Compatible with organization structure

Consistent with financial reports Systematic, logical Capable of expansion



Chart of Accounts Corresponds to fund types and net

asset classes Revenue/Expense codes Asset/Liability codes Flexible to meet reporting needs

Financial statementsManagement reportsRegulatory reporting



Chart of Accounts Assets

Increased by debitsDecreased by creditsNormally debit balance

Cash & Equivalents Receivables Property, Plant & Equipment



Chart of Accounts Liabilities

Increased by creditsDecreased by debitsNormally credit balance

Payables Long Term Debt Deferred Revenue



Chart of Accounts Net Assets

Increased by creditsDecreased by debitsNormally credit balance



Accounting Entry DEBITS - left side of an account CREDITS - right side of an account

ACCOUNTING EQUATION:Assets = Liabilities + Net Assets

orAssets - Liabilities = Net Assets



Problems



1. The objectives of accounting for public colleges or universities are to provide information that will help:

a. managers increase the economic wealth of the institution

b. managers effectively allocate and use resources

c. others who wish to evaluate the financial operations of the institution

d. b and c onlye. a and b only



2. Which of the following is not normally associated with a higher education institution’s accounting practices?

a. Institutions use available resources to provide goods and services to meet a social need

b. Institutions are concerned with the proper effective use of resources in accordance with GAAP

c. Institutions carefully match expenses with related revenues for each period for a strict determination of net income

d. Resource providers often direct how resources are to be used



3. Expenditures of higher education institutions may be restricted:

a. by persons or organizations outside the institution as to specific uses

b. to limit the use of principal only after a specified time period

c. by the institution’s governing boardd. a and c onlye. a and b only



4. Current operations include economic resources of a college or university that are expendable for:

a. the chief missions of the institutionb. current operations of the institutionc. unrestricted and restricted purposesd. all of the abovee. a and b only



5. Which of the following pairs of statements do not present basically the same financial information?

a. Statement of Revenues, Expenses and Changes in Net Assets/Statement of Activities

b. Balance Sheet/Statement of Net Assetsc. Statement of Activities/Statement of Cash

Flowsd. Income Statement/Statement of Activitiese. Statement of Net Assets/Statement of Financial

Position



FAC Resourceshttp://www.sco.state.co.us/FAC/fac_index.

htm

COFRS Chart of Accounts Accounting Models Guidebook HE Accounting Standards



HE Accounting Standards1. Basic Accounting & Reporting Structure2. Tuition & Fee Accounting3. Recording & Reporting of Indirect Costs4. Non-Exchange Transactions5. Capital Asset Reporting7. Cash & Short-term Investments8. Reporting Standard Financial Aid &

Scholarship Allowances



Higher Education Accounting Standards

7. State Appropriations11. Recording Internal Service Center Activity12. College Work Study Programs13. Financial Statement Disclosures14. Reporting & Disclosures of Related

Foundations & Corporations17. Financial Statement Presentation18. Compensated Absences for Annual & Sick

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2003 cfma/csma/cima spring educational seminar

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