recent gasb standards and higher education
DESCRIPTION
Recent GASB Standards and Higher Education. Sue Menditto Senior Manager Accounting and Finance Programs NACUBO. GASB 35 Projects and Resources. IPEDS Survey considerations Listserv UNC Chapel Hill NACUBO Training Implementation Guide Web links to F/S GASAC NASACT - PowerPoint PPT PresentationTRANSCRIPT
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Recent GASB Standards and Higher Education
Sue MendittoSenior ManagerAccounting and Finance ProgramsNACUBO
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GASB 35Projects and Resources
IPEDS Survey considerations
Listserv UNC Chapel Hill
NACUBO Training Implementation Guide Web links to F/S
GASAC NASACT
Task force with higher education participation
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GASB 39Introduction
Officially known as Governmental Accounting Standards Board Statement No. 39, Determining Whether Certain Organizations Are Component Units, an amendment of GASB Statement 14
Commonly referred to as Affiliated Organizations
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GASB 39Project History
1990—Project began 1991—GASB Statement No. 14
Paragraph 41 – future guidance 1994—First exposure draft 2001—Second exposure draft NACUBO’s position
www.nacubo.org 2002—Final Standard
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GASB 39GASB 14 – The Genesis
Financial reporting entity Primary government Organizations for which the primary
government is financially accountable Other organizations for which the
nature and significance of their relationship with the primary government are such that exclusion would cause the reporting entity's financial statements to be misleading or incomplete.
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GASB 39Misleading to Exclude
Why GASB 39 was issued New standard amends GASB 14 to
define legally separate, tax-exempt fund-raising organizations as component units
Basis is “misleading to exclude”
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GASB 39Misleading to Exclude
Matter of professional judgment to determine whether the nature and the significance of relationship with the primary government warrants inclusion.
Organizations affiliated with governmental units, agencies, colleges, universities, hospitals, and other entities may warrant inclusion.
An example of an affiliated organization that may be evaluated for inclusion is a nonprofit corporation whose purpose is to benefit a governmental university by soliciting contributions and managing those funds.
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GASB 39Criteria
Must meet three criteria Holds resources (almost) entirely for
direct benefit of institution, its component units, or its constituents
Institution or its component units are entitled to access majority of resources
Individual affiliated organization resources are significant
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GASB 39Criteria
First criterion Intended to exclude federated
fundraising organizations with ability to direct resources to multiple beneficiaries
Example: United Way
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GASB 39Criteria
Second criterion Institution is entitled to or has the
“ability to otherwise access” the majority of affiliated organization resources
Past trend of providing resources Affiliated organization honors requests
from institution Financially interrelated per FASB 136
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GASB 39Criteria
Third criterion Resources held by individual affiliated
organization must be significant to institution
If affiliated organization’s resources not significant, fails test (and not reported)
Excludes most Parent Teacher Organizations or booster clubs supporting public school districts
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GASB 39Reporting Requirement
Affiliated Organizations that meet the criteria must be included in an institution’s financial statements Discrete presentation is required
Statement of Net Assets Statement of Revenues, Expenses and
Changes in Net Assets Statement of Cash Flows not required
Unless no affiliated organization audit Institution prepares the cash flow
statement
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GASB 39Display Options
Institution and sole component unit in separate columns on same page
Component unit on succeeding page Institution and multiple component
units in separate columns on same page
Multiple component units in separate columns on succeeding page
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GASB 39Display Considerations
FASB entities Option to present on separate page
immediately following each GASB statement
Can adapt FASB classifications to present on same page using GASB classifications
GASB entities Rare One institution out of 160 in a NACUBO
training
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GASB 39Display Considerations
Combined totals for multiple component units Requires detail in footnote disclosure
Compatibility Compatibility of terms Program expenses Natural expenses
Management’s Discussion and Analysis
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GASB 39Footnote Disclosures
Required disclosures Description of the component unit Nature and amount of significant
transactions Explanation of transaction differences
due to different reporting periods Other disclosures essential for fair
presentation—a matter of professional judgment
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GASB 39Effective Date
Fiscal years beginning after June 15, 2003 For most colleges and universities,
fiscal year ending June 30, 2004 Earlier adoption encouraged
Failure to implement could result in adverse financial statement opinion for institution
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GASB 39Implementation Issues
Review each potential component unit
Resolve display issues Assess impact on audit schedule Assess impact on audit fees Develop communication strategy
Primary Government Board / Executive Management Affiliated Organizations
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GASB 39Foundation Issues
Work with the Institution Compliance by institution is
mandatory, if applicable
Better to cooperate than have decisions made without foundation’s input
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GASB 39Foundation Issues
Consequences of Non-cooperation Direct
None—unless special state statutes apply
Indirect Strained relationship with institution Rescission of authority to use
institution’s name in fundraising
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GASB 39Conclusion
GASB desire for increased disclosure and transparency Began with GASB 34/35 reporting
changes Also seen in current Performance
Measurement Project NACUBO web-cast:
www.nacubo.org