Copyright © 2010 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin Chapter 16 Accounting for Colleges and Universities.

Slides:



Advertisements
Similar presentations
College and University Accounting—Private Institutions
Advertisements

Chapter 12 Accounting for Hospitals and Other Health Care Providers
Accounting for Hospitals and Other Health Care Providers
McGraw-Hill/Irwin©2007, The McGraw-Hill Companies, All Rights Reserved Essentials of Accounting for Governmental and Not-for-Profit Organizations Chapter.
Colleges and Universities
Chapter 2 Principles of Accounting and Financial Reporting for State and Local Governments McGraw-Hill/Irwin Copyright © 2013 by The McGraw-Hill Companies,
Chapter Seventeen Accounting for State and Local Governments (Part II) Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or.
McGraw-Hill/Irwin Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved. Accounting for Colleges and Universities Chapter 15.
McGraw-Hill/Irwin Not-for-Profit Entities 19 Copyright © 2009 The McGraw-Hill Companies, Inc. All rights reserved.
Chapter 131 Health Care Providers and Colleges and Universities.
VICKI VANDENBERG, CPA PARTNER KEITH MARTINEZ, CPA ASSOCIATE PLANTE MORAN DECEMBER 13, 2011 Net Asset Classification – Why Is It Important?
Copyright © 2010 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin Chapter 14 Accounting for Not-for-Profit Organizations.
Advanced Accounting, Fourth Edition
Chapter 18 including Voluntary Health and Welfare Organizations Accounting for Nonprofit Organizations.
Advanced Accounting, Fourth Edition
McGraw-Hill/Irwin©2007, The McGraw-Hill Companies, All Rights Reserved Essentials of Accounting for Governmental and Not-for- Profit Organizations Chapter.
Health Care Organizations
Marketable Securities
McGraw-Hill/Irwin©2007, The McGraw-Hill Companies, All Rights Reserved Essentials of Accounting for Governmental and Not-for-Profit Organizations Chapter.
Chapter 12A Accounting for Not-for-Profit Organizations.
Chapter 12B Accounting for Colleges and Universities.
McGraw-Hill/Irwin©2007, The McGraw-Hill Companies, All Rights Reserved Essentials of Accounting for Governmental and Not-for-Profit Organizations Chapter.
Chapter Eighteen Accounting and Reporting for Private Not-for- Profit Organizations Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved.
2 Chapter Fund Accounting.
Fund Accounting Jim Corkill Accounting Services & Controls November 2011.
©2003 Prentice Hall Business Publishing, Advanced Accounting 8/e, Beams/Anthony/Clement/Lowensohn Accounting for Not-for-Profit Organizations Chapter.
Chapter 10 Accounting for Not-For-Profit Organizations
Chapter Eighteen Accounting and Reporting for Private Not-for- Profit Entities Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction.
Personal Financial Statements and Accounting for Governments and Not-For-Profit Organizations Chapter 13 © 2011 Cengage Learning. All Rights Reserved.
Accounting for Private Not-for-Profit Organizations
Private Colleges & Universities Development of Accounting Standards NACUBO 1973 AICPA’s Audits of Colleges and Universities FASB 93, 116, 117, 124, 133,
Advanced Accounting by Debra Jeter and Paul Chaney Chapter 20: Accounting for Nongovernment Nonbusiness Organizations: Colleges and Universities,
Non-Government NPOs Follows Non-governmental Hierarchy shown on pp 4-5 But FASB did very little to develop financial accounting standards for Non-governmental.
Other NFP - 1 OTHER NFP ENTITIES. Other NFP - 2 Not-for-Profit Organizations  General Characteristics –Contributed resources from providers without a.
October 13, 2004 © Campus Strategies 1 West Virginia Higher Education Policy Commission FASB-GASB Differences October Larry Goldstein, President.
Module 4 External (GAAP) Financial Reporting Convery
Govt. Reporting - 1 GOVERNMENTAL REPORTING City Council Budgetary Hearing.
Kuali Financial Systems – Financial Administrator Development Series - October, 2006 Fund Accounting.
McGraw-Hill/Irwin©2007, The McGraw-Hill Companies, All Rights Reserved Essentials of Accounting for Governmental and Not-for-Profit Organizations Chapter.
McGraw-Hill© 2007 The McGraw-Hill Companies, Inc. All rights reserved. Principles of Accounting and Financial Reporting for State and Local Governments.
Essentials of Accounting for Governmental and Not-for-Profit Organizations Chapter 10 Accounting for Not-For-Profit Organizations McGraw-Hill/Irwin Copyright.
Essentials of Accounting for Governmental and Not-for-Profit Organizations Chapter 7 Fiduciary Funds McGraw-Hill/Irwin Copyright © 2008 by The McGraw-Hill.
Essentials of Accounting for Governmental and Not-for-Profit Organizations Chapter 9 Accounting for Special Purpose Entities, Including Public Colleges.
© The McGraw-Hill Companies, Inc., 2004 Slide 17-1 McGraw-Hill/Irwin Chapter Seventeen Accounting for State and Local Governments (Part 2)
© The McGraw-Hill Companies, Inc., 2004 Slide 18-1 McGraw-Hill/Irwin Chapter Eighteen Accounting and Reporting for Private Not-For- Profit Organizations.
Chapter 11 College and University – Private Institutions
Financial Accounting Fundamentals
Chapter 10 Objectives: Learn about permanent funds Learn about fiduciary funds Learn how gains and losses are treated How trusts guard against inflation.
Chapters 12 Learn presentation and recognition of: NFPs Health Care Organizations Universities.
Chapter Seventeen Accounting for State and Local Governments, Part II McGraw-Hill/Irwin Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights.
Basic Financial Statements: Overview. Principle 1: Accounting & Reporting Capabilities  Present fairly and with full disclosure funds and activities.
Fund Accounting Jim Corkill Business & Financial Services November 2014.
McGraw-Hill© 2007 The McGraw-Hill Companies, Inc. All rights reserved. Accounting for Colleges and Universities Chapter 16.
Essentials of Accounting for Governmental and Not-for-Profit Organizations Chapter 11 College and University – Private Institutions Copyright © 2015 McGraw-Hill.
11-1 Chapter Eleven Accounting for State and Local Governments, Part I McGraw-Hill/Irwin Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights.
Essentials of Accounting for Governmental and Not-for-Profit Organizations Chapter 12 Accounting for Hospitals and Other Health Care Providers Copyright.
FISCHER | TAYLOR | CHENG Accounting for Private Not-for-Profit Organizations.
Accounting At Indiana University Kathleen T. McNeely Associate Vice President Financial Management Services.
Chapter 14 Accounting for Not-for-Profit Organizations McGraw-Hill © 2003 The McGraw-Hill Companies, Inc. All rights reserved.
Governmental Accounting Revenues from Nonexchange Transactions Local Government Corporation.
Essentials of Accounting for Governmental and Not-for-Profit Organizations Chapter 9 Accounting for Special Purpose Entities, Including Public Colleges.
1 Fund AccountingNovember 17, 2015 Fund Accounting Jim Corkill | Controller Business and Financial Services Controller’s Office.
Essentials of Accounting for Governmental and Not-for-Profit Organizations Chapter 7 Fiduciary Funds Copyright © 2015 McGraw-Hill Education. All rights.
Colleges and Universities
Accounting for Not-for-Profit Organizations
Chapter 9 Financial Statements.
John Carroll University Faculty Forum
Nonprofit Management Certificate Course
Government and Non-Profit Accounting
Not-for-Profit Entities
Presentation transcript:

Copyright © 2010 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin Chapter 16 Accounting for Colleges and Universities

16-2 Learning Objectives After studying Chapter 16, you should be able to:  Distinguish between GAAP for public and private colleges and universities (C&U)  Describe financial reporting for public and private C&U

16-3 Learning Objectives (Cont’d)  Discuss accounting and reporting issues for all C&U, such as accounting for: Assets, liabilities, and net assets Revenues and expenses Cash flows  Journalize transactions for private C&U  Prepare financial statements for public and private C&U

16-4 Learning Objectives (Cont’d)  Discuss managerial, auditing, and reporting issues, such as: Performance measures Auditing Federal financial assistance Related entities

16-5 GAAP for Colleges and Universities Public C&U Private C&U GASBS 35SFAS Nos. (1999) 116 and 117 (1993) GASBS 34 as special-purpose governments AICPA AAG— State and AICPA AAG— Local GovernmentsNot-for-Profit Organizations

16-6  Statement of net assets (see Ill. 16-1), classifying net assets into: Invested in capital assets, net of related debt Restricted Unrestricted  Statement of revenues, expenses and changes in net assets (see Ill. 16-2)  Statement of cash flows (see Ill. 16-3) Financial Statements for a Public C&U

16-7  Statement of financial position (see Ill.16-4), classifying net assets into: Unrestricted Temporarily restricted Permanently restricted  Statement of activities (see Ill. 16-5)  Statement of cash flows (see Ill. 16-6) Financial Statements for a Private C&U

16-8 Assets  Assets available for all purposes of the C&U at the discretion of the governing board are unrestricted, and arise from Instructional, research, and public service programs Auxiliary activities, such as residence halls, food service, athletic programs, and stores  Assets that are not available for current operating purposes due to limitations placed on them by parties external to the C&U are restricted or limited as to use

16-9 Assets—Investments  Investments are reported at fair value as of the end of the reporting period  Any unrealized gains or losses arising from fair value reporting are shown on the operating statement (statement of activities or statement of revenues, expenses, and changes in fund net assets)

16-10  Assets loaned to students, faculty, and staff  Provided by gifts, grants, investment income, and transfers from other funds  Loan activities are on a self-sustaining basis— revolving basis, i.e., repayment of loans and interest received are available for lending to others  Interest income on loans and temporary investments is expected to offset the cost of administration of loan activities and the loss from uncollectible loans Loan Assets

16-11  Long-lived assets, such as land, buildings, and equipment, are carried at cost or fair value for donated assets  Long-lived assets are capitalized  With the exception of inexhaustible assets, such as land, capitalized assets are depreciated  Public C&U report infrastructure and can use the “modified approach,” rather than depreciation for certain eligible infrastructure assets (see Chapter 7) Assets — Capital

16-12 Collections held by museums and libraries of colleges and universities do not have to be recognized as assets (and consequently depreciated) if they are:  Held for public exhibition  Protected and preserved  Subject to a policy that requires proceeds from sales to be used to acquire other similar assets Assets—Collections

16-13 Endowment—the donor has stipulated that the principal of his/her gift is not expendable as of the reporting date. However, the gift can be invested for the purpose of producing income. Generally, there are two forms of endowment:  Permanent —the principal must remain intact for perpetuity  Term—the principal remains intact for a period of time Restricted Net Assets — Endowment and Similar Activities

16-14  Endowment income may be unrestricted or restricted depending upon the donor’s conditions Endowment income is only added to the principal of the endowment if the provisions of the gift require it  State institutional investment laws may supersede GAAP Restricted Net Assets — Endowment and Similar Activities (Cont’d)

16-15 In maintaining the principal of the endowment certain concepts are used:  Under a total return investment objective changes in fair value of the portfolio as well as income are considered part of the return on the investment portfolio  Spending rate is the proportion of total return that may prudently be used by an institution for current purposes Restricted Net Assets — Endowment and Similar Activities (Cont’d)

16-16  The C&U shares the interest and/or investment with the donor, examples include charitable lead and remainder trusts  Annuity agreements are gifts in which donors require a stipulated amount of money returned to them or other beneficiary each year. At some point in time (e.g., death) the C&U owns the assets and income  Pooled life income agreements require that total income earned on the donor’s pro rata share of donated assets be returned to the donor or other beneficiary Restricted Net Assets — Split-interest Agreements

16-17  Internal Revenue Code provisions may apply to these contributions  Split-interest agreements should be carefully drawn with attention given to the definition of income, allocation of expenses, etc  Liabilities for annuity payments are calculated using actuarial and present value concepts Restricted Net Assets — Split-interest Agreements (Cont’d)

16-18  Tuition and fees  Federal, state, and local appropriations  Private gifts  Grants and contracts  Investment income  Sales and services of educational activities  Sales and services of auxiliary activities  Other sources Revenue Classifications

16-19 Revenues — Tuition & Fees  Record Tuition & Fees at gross amount  Report Tuition & Fees net of estimated uncollectible amounts For public C&U a contra-revenue account is allowable for recording and reporting estimated uncollectible amounts For private C&U revenue should be directly adjusted for uncollectible amounts  Tuition & Fees should also be reported net of tuition discounts and scholarships

16-20 Revenues — Nonexchange Transactions  Nonreciprocal transactions in which the donor does not receive “quid pro quo” are called nonexchange transactions (e.g., gifts and grants)  These gifts are considered increases to Temporarily restricted net assets for a private C&U Restricted net assets for a public C&U

16-21  Grants may be exchange transactions if the grantor receives direct benefits in the form of something of value in exchange for the grant e.g., if a university tests a product under a federal contract, but the government retains the patent (or rights) to use the product  Many C&U treat research grants as exchange transactions because the grantor expects performance and a report on how the funds were used Revenues—Grants

16-22 For private C&U, contributed services are reported as contributions and expenses if they  Would need to be purchased by the organization  Require specialized skills  Are provided by professionals with those skills  Can be measured and are material (Note: GASB has no provision for contributed services) Revenues—Contributed Services

16-23  Recognized on the accrual basis  May be classified by: Program functions Organization units Projects Object classes Current Operating Expenses

16-24  Instruction  Research  Public service  Academic support  Student services  Institutional support  Operation and maintenance of plant  Scholarships and fellowships Functional Classification of Expenditures

16-25 Decision makers monitor the performance of C&U  Internal management (administrators)  Oversight bodies (governing boards, accrediting agencies)  Funding sources (governments, donors, grantors, investors)  Constituents (students, faculty, alumni) Performance Measures

16-26 C&U are encouraged to provide qualitative measures that help assess accomplishments:  Outputs, e.g., faculty productivity, number of graduates, job placements  Outcomes, e.g., increased knowledge of students, satisfaction of alumni, value added to students in the areas of skills and knowledge Nonfinancial Performance Measures

16-27 Financial measures used to evaluate viability, return and leverage:  Expendable resources to debt  Unrestricted resources to operations  Expendable resources to total net assets  Total resources per full-time equivalent student  Maximum debt service coverage Financial Performance Measures

16-28  C&U that expend more than $500,000 of federal awards a year are subject to a Single Audit  Auditors will use generally accepted auditing standards, government auditing standards (yellow book), and OMB Circular A-133  Auditors must be sure the C&U has complied with the cost principles in OMB Circular A-21 and the cost and administrative principles in OMB Circular A-110 Auditing Issues in C&U

16-29  C&U may have institutionally related foundations for fund-raising, alumni relations, or management of assets  In general, related entities should either be disclosed in the notes to the financial statements or reported as component entities, depending on the degree of control and economic interest Related Entities

16-30  GASB requires public universities* to report affiliated organizations as component units if these criteria are met: The economic resources received or held are almost entirely for the direct benefit of the university The university is entitled to access those resources The economic resources are significant to the university  Discrete presentation is required; i.e., a separate column on the face of the financial statements * The GASB requirement does not apply exclusively to universities GASB Component Units

16-31  Public colleges and universities follow GASB guidance  Private colleges and universities follow FASB guidance  Colleges and universities receive a substantial amount of federal funds leading to Single Audits  Under GASB standards public C&U are required to bring affiliated fundraising, medical, research, and athletic foundations and organizations into their financial reports END Concluding Comments