LEGAL TO GAAP RECONCILIATION Sedong John Director, Systemwide Financial Standards & Reporting CSU Office of the Chancellor

Learning Objectives Understand the legal to GAAP reconciliation requirement as part of the Data Integrity Certification. Understand why accuracy at the CSU fund level is important. Make sure both legal and GAAP data are consistent and accurate at the CSU fund level. APRIL 2016YEAR-END LEGAL TRAINING 2

Data Integrity Certification The Financial Data Integrity Certification Form (Legal Manual Appendix 09) and GAAP Data Integrity Certification Form (GAAP Manual 11.2) signed by the campus vice presidents include certification of accuracy of data at the CSU fund level. Legal to GAAP reconciliation at the CSU fund level is required for all funds as part of the GAAP Data Integrity Certification process. APRIL 2016YEAR-END LEGAL TRAINING 3

Data Integrity Certification (cont.) The GAAP Data Integrity Certification covers the following: GAAP FIRMS GAAP reporting package submitted through TM1 PBCs Supplementary data for SRB financial statements SCO GAAP templates APRIL 2016YEAR-END LEGAL TRAINING 4

Why Accuracy at CSU Fund Level is Important Previously separate non-governmental state funds became CSU Funds within the state fund 0948, as a result of Revenue Management Program (RMP) (EO 1000). CSU Fund is the only identifier available to distinguish among different programs such as Housing, Parking, Extended Ed, financial aid funds, the operating fund, and other funds (Ed Code Section 89721). APRIL 2016YEAR-END LEGAL TRAINING 5

Why Accuracy at CSU Fund Level is Important (cont.) CSU Fund level information is used in MD&A of the CSU System Financial Statements SRB Financial Statements CSU management analyses and reports Information request from labor unions and external users Litigation support Identifying the state fund for reports to the SCO APRIL 2016YEAR-END LEGAL TRAINING 6

Quiz 1 True or False? Since the Statement of Net Position in the CSU system financial statements displays the information at the net position category level, the CSU Fund level information is not essential to the CSU system financial statements. APRIL 2016YEAR-END LEGAL TRAINING 7

Legal to GAAP Reconciliation Last year, campuses were required to submit the legal to GAAP reconciliation for CSU funds in state fund 0948 to the CO to make sure the beginning balances were accurate before the current year ( ) activities and adjustments were added. Errors discovered in the reconciliation were corrected. APRIL 2016YEAR-END LEGAL TRAINING 8

Legal to GAAP Reconciliation (cont.) This year, campuses are required to perform legal to GAAP reconciliation for all CSU funds in 0948 and any other active non-governmental state funds, but are not required to submit it to the CO, unless specifically requested by the CO or the auditor during the audit. There are no changes to the existing requirement for legal to GAAP reconciliation for governmental funds, which must be submitted to the CO using the template in the GAAP Manual Section 18.4 for submission to the SCO APRIL 2016YEAR-END LEGAL TRAINING 9

Legal to GAAP Reconciliation (cont.) Campuses can use the template provided by the CO last year or use their own format to do the reconciliation. The objective is to make sure legal data and GAAP data are accurate and consistent at the CSU Fund level. Any differences between legal data and GAAP data must be explainable for valid reasons (i.e., timing differences or permanent differences). APRIL 2016YEAR-END LEGAL TRAINING 10