Recent GASB Standards and
Higher Education
Sue Menditto
Senior Manager
Accounting and Finance Programs
NACUBO
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GASB 35
Projects 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 39
Introduction
 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 39
Project 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 39
GASB 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 39
Misleading 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 39
Misleading 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 39
Criteria

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 39
Criteria

First criterion
Intended to exclude federated fundraising
organizations with ability to direct
resources to multiple beneficiaries
Example: United Way
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GASB 39
Criteria

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 39
Criteria

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 39
Reporting 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 39
Display 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 39
Display 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 39
Display Considerations

Combined totals for multiple component
units


Compatibility




Requires detail in footnote disclosure
Compatibility of terms
Program expenses
Natural expenses
Management’s Discussion and Analysis
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GASB 39
Footnote 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 39
Effective 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 39
Implementation 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 39
Foundation 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 39
Foundation 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 39
Conclusion

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
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