May 19, 2016 GAAP MANUAL UPDATES AND REMINDERS Criselle Espiritu, Financial Reporting Analyst SFSR, Chancellor’s Office

Learning Objectives Know the GAAP Accounting and Reporting Manual updates and key changes Know the changes in the supplementary schedule Know the key reminders specific to GAAP reporting MAY 2016YEAR-END GAAP TRAINING 2

GAAP Manual Updates and Key Changes in FY MAY YEAR-END GAAP TRAINING

GAAP Manual Updates: Key Changes MAY YEAR-END GAAP TRAINING

Supplementary Information Changes Updated the financial statement line descriptions in SNP and SRECNP Added investments footnote (Fair Value hierarchy) – GASB 72 implementation Added a row in long term liabilities schedule (claims liability) Updated future minimum lease and long-term debt obligation footnotes. Updated other postemployment benefits obligation footnote. Updated the GAAP financial reporting checklist MAY 2016YEAR-END GAAP TRAINING 5

Supplementary Information Changes SNP: Updated the financial statement line description MAY 2016YEAR-END GAAP TRAINING 6 BeforeAfter Prepaid expenses and other assetsPrepaid expenses and other current assets Net pension obligationNet pension liability Accrued compensated absences– current portionAccrued compensated absences, current portion Capitalized lease obligations – current portionCapitalized lease obligations, current portion Long-term debt obligations – current portionLong-term debt obligations, current portion Claims Liability for losses and LAE – current portionClaims liability for losses and loss adjustment expenses, current portion Depository accounts – current portionDepository accounts Claims Liability for losses and LAE, net of current portionClaims liability for losses and loss adjustment expenses, net of current portion Other postemployment benefits obligationOther postemployment benefits obligations Net Position: Restricted for: Expendable: OtherNet Position: Restricted for: Expendable: Others

Supplementary Information Changes SRECNP: Updated the financial statement line descriptions MAY 2016YEAR-END GAAP TRAINING 7 BeforeAfter Interest ExpensesInterest expense Income (loss) before other additionsIncome (loss) before other revenues (expenses)

Supplementary Information Changes FN2.5 Fair Value Hierarchy of Investments at June 30, 20CY – New in FY MAY 2016YEAR-END GAAP TRAINING 8

GASB No. 72 – Fair Value Hierarchy MAY Inputs (other than quoted market prices included within Level 1) that are observable for the asset/liability, either directly or indirectly (e.g. observable prices for similar assets/liabilities in active markets, prices for identical assets or liabilities in non-active markets, direct/indirect observable market inputs) Inputs (other than quoted market prices included within Level 1) that are observable for the asset/liability, either directly or indirectly (e.g. observable prices for similar assets/liabilities in active markets, prices for identical assets or liabilities in non-active markets, direct/indirect observable market inputs) Quoted prices (unadjusted) in active markets for identical assets or liabilities that a government can access at the measurement date. Unobservable inputs for the asset/liability; used to the extent that observable inputs are not available. Unobservable inputs for the asset/liability; used to the extent that observable inputs are not available. YEAR-END GAAP TRAINING

Supplementary Information Changes FN4 Long-Term Liabilities Schedule: Row added for claims liability for losses and loss adjustment expense MAY 2016YEAR-END GAAP TRAINING 10 Claims liability for losses and loss adjustment expenses

Supplementary Information Changes FN5 Future Minimum Lease Payments – Capital Lease Obligations: Updated the fiscal years MAY 2016YEAR-END GAAP TRAINING UPDATED 2. ADDED 3. ADDED

Supplementary Information Changes FN6 Long-Term Debt Obligation Schedule: Updated the fiscal years MAY 2016YEAR-END GAAP TRAINING UPDATED 2. ADDED

Supplementary Information Changes FN9 Other postemployment benefits obligation (OPEB) MAY 2016 YEAR-END GAAP TRAINING 13 ADDED

Supplementary Information Changes Updated the GAAP financial reporting checklist MAY 2016YEAR-END GAAP TRAINING 14

Knowledge Check Question #1 Which of the following component unit templates is updated in the GAAP manual for fiscal year ? a. Supplementary information template b. GASB Statement 61 questionnaire c. Qualifications Review Questionnaire for Proposed Audit Firm d. None of the above MAY YEAR-END GAAP TRAINING

Knowledge Check Answer #1 Which of the following component unit templates are updated in the GAAP manual for fiscal year ? a. Supplementary information template MAY YEAR-END GAAP TRAINING

Reminders in FY MAY YEAR-END GAAP TRAINING

Reminders Investment classification Capital assets Long term debt classification Related party transactions Tie-out points MAY 2016YEAR-END GAAP TRAINING 18

Reminders: FN2.1 Composition of Investments Minimize usage of other investments MAY 2016YEAR-END GAAP TRAINING 19 Composition of investments State of California Surplus Money Investment Fund (SMIF)US agency securities State of California Local Agency Investment Fund (LAIF)US treasury securities Corporate bondsEquity securities Certificates of depositExchange traded funds Mutual fundsAlternative investments: Money market fundsPrivate equity (including limited partnerships) Repurchase agreementsHedge funds Commercial paperManaged futures Asset backed securitiesReal estate investments (including REITs) Mortgage backed securitiesCommodities Municipal bondsDerivatives Other alternative investment types

Reminders: FN2.2 Investments held by the University under contractual agreements: MAY 2016YEAR-END GAAP TRAINING 20 MUST AGREE Footnote 2.2 (Component Unit) Footnote 3.3 (Campus)

Reminders: FN3.1 Composition of Capital Assets Use only the Prior Period Adjustments column transactions that resulted in a financial statement restatement. MAY 2016YEAR-END GAAP TRAINING 21

Reminders: Valuation of Capital Assets MAY AssetCurrent GASBGASB 72 Donated capital assets Estimated fair value at acquisition plus ancillary charges, if any Acquisition value Donated works of art or historical treasures Historical cost or fair value at date of donation Acquisition value Capital assets received in a service concession arrangements Fair valueAcquisition value Acquisition value is the price that would be paid to acquire an asset with equivalent service potential or the amount for which a liability could be liquidated at the acquisition date. For the assets noted above, an entry-price measurement is more appropriate than an exist-price measurement because the transaction represents the government acquiring the asset. YEAR-END GAAP TRAINING

Reminder: FN4 Long-term Liabilities Activity Schedule Aux-CO SRB related debts should be in notes payable related to SRB. MAY 2016YEAR-END GAAP TRAINING 23

Reminders: FN8 Transactions with Related Entities Campus and component unit’s related party transactions agree. MAY 2016YEAR-END GAAP TRAINING 24 CAMPUS FN 14 COMPONENT UNIT’S FN8 MUST AGREE

Reminders – Tie-out points All balances (by total) and (by account) must agree in the three schedules. MAY 2016YEAR-END GAAP TRAINING 25 TM1 YES Supplementary Information Template FIRMS IPEDS GAAP data

Reminders – Tie-out points All balances by total and by account must agree in the three schedules. MAY 2016YEAR-END GAAP TRAINING 26 TM1 YES Supplementary Information of Audited Financial Statements FIRMS IPEDS GAAP Data Assets Current assets: Cash and cash equivalents 95,266 Short-term investments 2,653,778 Accounts receivable, net 23,268 Leases receivable, current portion Notes receivable, current portion Pledges receivable, net Prepaid expenses and other current assets Total current assets 2,772,312

Knowledge Check Question #2 Which of the following schedule(s) must be agreed when comparing GAAP ending balances? a. TM1 YES b. Supplementary information template c. FIRMS IPEDS GAAP data d. All of the above MAY YEAR-END GAAP TRAINING

Knowledge Check Answer #2 Which of the following schedule(s) must be agreed when comparing GAAP ending balances? a. All of the above MAY YEAR-END GAAP TRAINING

Resources Link to GAAP Accounting and Reporting Manual (CH 8, Presentation of Component Units) Systemwide Financial Standards & Reporting Contact: MAY SFSR GAAP Contact) Sedong John, Sheralin Klinthong, Associate Evajoy Tito, Criselle Espiritu, Financial Reporting Su Chen, Financial Reporting YEAR-END GAAP TRAINING

MAY YEAR-END GAAP TRAINING