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CHAPTER 4.5.1
GAAP ADJUSTMENTS AND RECLASSIFICATION ENTRIES
REVENUES AND EXPENSES: STUDENT TUITION AND FEES, NET
1
GAAP POLICIES AND PROCEDURES
Student tuition and fee revenue, sales and services of educational activities, and sales and
services of auxiliary enterprises, including revenues from student housing programs, are
presented net of scholarship and doubtful accounts allowances applied to student accounts.
Certain other scholarship amounts are paid directly to, or refunded to, the student and are
reflected as scholarships and fellowships expenses.
An auxiliary enterprise is an entity that exists predominantly to furnish goods or services to
students, faculty, or staff, and that charges a fee directly related to, although not necessarily
equal to, the cost of the goods or services. Auxiliary enterprises include residence halls, food
services, intercollegiate athletics (if self-supporting), campus unions, college stores, and
services such as copy centers, day care centers, barber shops, beauty parlors, and movie
theaters. Revenues generated by auxiliary enterprises would be recorded “sales and services
of auxiliary enterprises” in GAAP.
The “sales and services of educational activities” include (1) revenues related incidentally to
the conduct of instruction, research, and public service, and (2) revenues for activities that exist
to provide instructional and laboratory experience for students and that incidentally create
goods and services that may be sold to faculty, students, staff, and the general public.
Examples of revenues of educational activities are film rentals, sales of scientific and literary
publications, testing services, and sales of products and services of dairy creameries, food
technology divisions, poultry farms, and health clinics (apart from health services) that are not
part of a hospital.
The allowance for doubtful accounts are recognized in the legal basis books. The change in the
allowance account are charged as a contra-revenue account (refer to Chapter 28 Accounts
Receivable in the Legal Manual and Chapter 4 Accounts Receivable in the GAAP Manual).
The contra-revenue accounts are automatically derived to the GAAP ledger, thus no further
GAAP adjustment is required.
Fees collected in advance of summer and fall terms and continuing education programs are
treated as unearned revenues as of fiscal year end.
2
RELEVANT ACCOUNTING LITERATURE
GASB Statement No. 34 Basic Financial Statements – and Management’s Discussion and
Analysis – for State and Local Government
4.05.1-1
GAAP Manual | GAAP Adjustments and Reclassification Entries – Revenues and
Expenses: Student Tuition and Fees | June 30, 2015
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3
OBJECTIVES OF GAAP ADJUSTMENTS
 To reclassify financial aid initially recorded as student grants and scholarships as an offset
to the tuition and fees (i.e. tuition discounting).
 To reclassify financial aid initially recorded as student grants and scholarships as an offset
to the sales and services of auxiliary enterprises such as student housing program (i.e.
tuition discounting).
 To record unearned revenues for fees collected in advance for summer and fall terms and
continuing education programs.
 To eliminate double counting of student and fees, if any exists.
 To reverse prior year accrual of revenues recorded in GAAP.
 To reverse revenues that were received by the campus on behalf of a discretely presented
component unit.
 To record resident assistant’s housing and tuition fee waivers as revenues and
compensation expense (benefit provided to resident assistant), if not recorded in legal basis.
4
GAAP ACCOUNTING T REATMENT AND JOURNAL ENTRIES
RELATED GAAP ACCOUNT(S)
721001 – Student tuition and fees (net of scholarship allowance)
721005 – Sales and services of educational activities
721006 – Sales and services of auxiliary enterprises (net of scholarship allowance)
GAAP ACCOUNTING TREATMENT
Revenues are reported net of discounts and allowances with the discount or allowance
amount parenthetically disclosed on the fact of the statement.
TUITION AND FEE DISCOUNTING
Net tuition and fees are simply gross tuition and fee revenues less scholarship allowances.
A portion of the financial aid grants and scholarships from sponsored programs are used
to pay student tuition and fees and auxiliary enterprise fees and the remainder are given
directly to the students. In legal basis accounting, there is no distinction all expenses are
derived to Scholarship and Fellowship account in GAAP.
For GAAP reporting purposes, the CSU should report the amount of financial aid the
student received in excess of the tuition and fees and auxiliary enterprise fees as
scholarship and fellowship expense. The financial aid amount applied to tuition and fees
and auxiliary enterprise fees should be reported as “discount and allowances” and an
offset against the corresponding revenues to which it applies.
4.05.1-2
GAAP Manual | GAAP Adjustments and Reclassification Entries – Revenues and
Expenses: Student Tuition and Fees | June 30, 2015
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If the campus is using the PeopleSoft Student Information System, then they will be able
to calculate the discount amount using the “Direct” method by obtaining all financial
aid payments applicable to student tuition and fees and sales of auxiliary enterprise
services. The discount amount is calculated using the reports generated from the
PeopleSoft Student Information System which is supposed to provide the actual
transactions.
If the student paid the tuition and fees upfront and received a financial aid award
subsequent to the payment, the student’s payment is recorded as tuition and fee revenue
then the financial aid award amount is included in the tuition discounting journal entry
and as grant revenue (i.e., Pell grant, Supplemental Educational Opportunity Grant
(SEOG), etc.).
There is no duplication of revenue (grants revenues and tuition and fees) and expense
under this situation. All loan payments where the campus is an agent for outside program
(sub loans for example) and payments for Associated Students Incorporated (ASI) fees
should be eliminated. The loans are not recognized as either a revenue or expense in
GAAP while ASI fees are collected and remitted to the ASI (component unit), who
recognizes the fee revenues. Do not include the entire amount awarded to the student, but
only the amount that applied to the fee charges.
Example:
In FY20CY, a campus received financial aid grant from the Pell Grant program
amounting to $11,000. The grant was used to pay tuition and fees of $8,000, and auxiliary
enterprise fees of $2,000. The remainder of $1,000 was given directly to the student.
Derived GAAP Entry (Period 1-12)
Account
722003
723007
Journal
Description
Class
Fund
(CSU
Account Name
(Net Position)
Program
Fund)
Amount
831-Restricted: expendable,
$11,000
Scholarship and Fellowships
08
408
scholarships and fellowships
Federal financial aid grants, 831-Restricted: expendable,
($11,000)
50
408
noncapital
scholarships and fellowships
Accounting records derived from legal for the receipt of financial aid grants, noncapital and
use of the aid to provide scholarships.
Manual GAAP Entry (Period 998)
Account
724004
722003
Journal
Description
4.05.1-3
Class
Fund
(CSU
Account Name
(Net Position)
Program
Fund)
Amount
Transfers to/from other CSU 831-Restricted: expendable,
$10,000
13
408
campuses, net
scholarships and fellowships
831-Restricted: expendable,
($10,000)
Scholarship and Fellowship
08
408
scholarships and fellowships
To reduce scholarship and fellowship expenses as these were applied to the tuition and fees
and auxiliary enterprise fees.
GAAP Manual | GAAP Adjustments and Reclassification Entries – Revenues and
Expenses: Student Tuition and Fees | June 30, 2015
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Manual GAAP Entry (Period 998)
Account
721001
721006
724004
Journal
Description
Fund
(Net Position)
Class
(CSU
Fund)
Account Name
Program
Amount
Student tuition and fees (net
$8,000
881-Unrestricted
50
485
of scholarship allowance)
Sales and services of auxiliary
$2,000
enterprises (net of scholarship 881-Unrestricted
50
485
allowance)
Transfer to/from other CSU
($10,000)
881-Unrestricted
13
485
campuses, net
To reduce the tuition and fees and auxiliary enterprise fees for scholarships from financial aid
grants (tuition discounting entry).
THE ALTERNATE METHOD
The alternate method satisfies the reporting requirement mandated by GASB Statement
No. 34, as amended by GASB Statement No. 35 Basic Financial Statements – and
Management’s Discussion and Analysis – for Public Colleges and Universities – an
amendment of GASB Statement No. 34, by applying a simple mathematical calculation to
the total financial aid. It was introduced as an alternative to estimate scholarship
allowances and student grants and scholarships expense since most institutions do not
have the ability to determine how much of which financial aid category relates to
scholarship allowance amounts versus student grants and scholarships amounts. As a
general rule, all financial aid is applied to the students’ accounts on a specific date rather
than posted on a case-by-case basis. Before reviewing the following calculation, it is
important to understand the definitions of the needed information. At the end of each
definition, a comparison with the direct method (where the campus can obtain detailed
information from the student information system) is noted.
(A) Financial aid not recognized as revenue by the institution represents Statement of
Net Position (SNP) transactions. These are resources held for others, such as
William D. Ford Direct Loans, Perkins Loans, Nursing Loans, Federal Family
Education Loan Program (FFELP) loans and loans (subsidized and unsubsidized
Stafford and PLUS Loans) where the institution serves only as a conduit. Not used
under the direct method.
(B) Financial aid being applied from resources already recognized as revenue by the
institution represents Statement of Revenues, Expenses, and Changes in Net Position
(SRECNP) transactions and will be used to calculate an amount to represent
Scholarship Allowances. This category has the potential for double counting of
revenue such as from the receipt of gifts, grants, investment income and the charging
of tuition and fees, housing and meals, and educationally related supplies from an
institutional bookstore (as applicable to each campus). Amounts to be included within
this category are Federal-based programs (such as SEOG and Pell Grants), Statebased programs (such as Cal Grant, State University Grant (SUG) and Educational
4.05.1-4
GAAP Manual | GAAP Adjustments and Reclassification Entries – Revenues and
Expenses: Student Tuition and Fees | June 30, 2015
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Opportunity Program (EOP) grant), and Institutional Scholarships. This is the same
under the direct method.
(C) Third party payments are SNP transactions that have the potential to create an
overpayment of the students’ accounts, thereby generating a refund. This category
primarily includes all external scholarships received on behalf of a particular student,
such as from Rotary, Foundation (from Foundation funds) and Reserve Officer’s
Training Corps (ROTC). Therefore, payments made by third-party payers are neither
gift nor grant revenue to the institution, nor a scholarship allowance to gross tuition,
because the purpose of the payment is to pay the fees that the student would otherwise
have to pay. Not used under the direct method.
(D) Total payments by students represent the amounts the students will pay on their
accounts excluding any financial aid. These resources should not create any
overpayments and should not generate a refund. For the purpose of this calculation,
timing issues are considered immaterial. Not used under the direct method.
(E) Total refunds made to students from all sources of funding will be used to calculate
an amount to be charged to Student Grants and Scholarships on the SRECNP. Not
used under the direct method.
(F) Total non-monetary institutional fee waivers (discounts) applied to students’
accounts are amounts that have the potential to create refunds when other financial
aid and/or payments have been posted to a student’s account. It will be used to
calculate an amount to represent Scholarship Allowances. Some of the different types
of fee waivers are Senior Citizen, International and Cal Vet. This is the same under
the direct method.
For a complete list of CSU’s fee waiver programs, go to:
http://www.calstate.edu/budget/student-fees/documents/Fee_waivers-Guide.pdf
Employee and employee dependent’s fee waivers should be reported as
compensation expense, not scholarship allowances.
(G) Total charges applied to students’ accounts during the fiscal year represent total
financial-aid eligible charges. These charges include, but are not limited to, tuition,
fees, housing, meals and books (as applicable to each institution). Not used under the
direct method.
(H) Total postings to students’ accounts that could potentially generate a refund are a
calculated value obtained by the sum of amounts from (A) + (B) + (C) + (F) as defined
above. Not used under the direct method.
(I) Percentage of institutional resources applied to students’ accounts that could
generate a refund that represents Scholarship Allowances and/or Student Grants
and Scholarships expense. This is a calculated value obtained by dividing the sum
of amounts (B) + (F) by (H) as defined above. Not used under the direct method.
(J) The amount of refunds to be reported as Student Grants and Scholarships expense
is a calculated value obtained by multiplying the amount from (E) by the percentage
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GAAP Manual | GAAP Adjustments and Reclassification Entries – Revenues and
Expenses: Student Tuition and Fees | June 30, 2015
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obtained from (I) as defined above. This amount represents an estimate of the
institutional resources provided in excess of amounts owed by the students to the
institution and that are refunded to the students. These amounts are obtained from the
student information system under the direct method.
(K) The amount of scholarship allowances is a calculated value obtained by subtracting
(J) from the sum of amounts (B) + (F) as defined above. This amount represents an
estimate of the institutional resources provided to students as financial aid in amounts
up to and equal to amounts owed by the students to the institution. This is the same
under the direct method.
NOTE: For Direct and Indirect Methods – Institutional fee waivers are considered to be
one category of scholarship allowances, as described under (F) above. The amount of
institutional fee waivers granted must be taken into consideration in the determination of
the percentage of grants and scholarships expense to be reclassified as scholarship
allowances. However, fee waivers normally are recorded in a campus’ legal basis
accounting records as a reduction of tuition and fees or auxiliary enterprise revenue, not
as an expense. If the amount of fee waivers is material in relation to the amount of
calculated scholarship allowances, the total amount of waivers should be added to the
calculated total of allowances, and included as part of the amount reported as scholarship
allowances in the SRECNP. This action by itself has no impact on net reported fee
revenues or grants and scholarships expenses.
REVENUE RECOGNITION (CAMPUS VS. COMPONENT UNIT)
For certain types of transactions, it may be difficult to determine if the revenue should be
reported in the financial statements of the campus or the discretely presented component
unit. The decision should be based on the “ownership” of the activity. The following
guidance is offered to assist the campus and its discretely presented component unit in
making this determination:
1. Who administers and makes decisions relating to the activity in question?
2. Who assumes the risks in the event of losses, claims, or lawsuits?
If the campus actually operates the activity, the campus should hold the funding and all
revenue and expenses should appear in the financial statements of the campus. If
ownership resides with the discretely presented component unit, the revenues and
expenses should appear in that discretely presented component unit’s financial
statements only, and not in the legal basis accounting records of the campus or in the
records of another discretely presented component unit.
Examples of the latter situation are Associated Student Body Organization and campus
Student Union registration fees, which are collected by the campus on behalf of the
appropriate discretely presented component unit and are transferred to and/or otherwise
made available for expenditure by the discretely presented component unit. The amounts
of fee revenue collected on behalf of the discretely presented component unit should not
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GAAP Manual | GAAP Adjustments and Reclassification Entries – Revenues and
Expenses: Student Tuition and Fees | June 30, 2015
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be reported for GAAP as campus fee revenues, to the extent that they are reported as fee
revenue of the discretely presented component unit. Integrated CSU Administrative
Manual (ICSUAM) Policy #13680.00 Placement and Control of Receipts for Campus
Activities
and
Programs
is
a
good
reference
source
at
https://csyou.calstate.edu/Policies/icsuam/Pages/default.aspx.
In the case of Associated Student Body (discretely presented component unit), the
elimination of revenue from registration fees and expenses (when funds are remitted to
the Associated Student Body recorded by the campus is accomplished by treating the
activity of the Associated Student Body Trust (CSU Fund 461) as agency fund
transactions for both Legal and GAAP purposes. Revenues earned and expenses incurred
in CSU Fund 461 in the campus’ legal basis accounting records are mapped to a
depository liability account for both Legal and GAAP purposes.
For campus Student Union discretely presented component unit, a portion of the student
union registration fees collected by the campus is used to pay its systemwide revenue
bond debt services, and the remaining fees are transferred to the student union for its
operations. Depending upon how the transfer to the student union is recorded in the legal
accounting records of the campus, a GAAP adjustment may or may not be required to
prevent revenue from being reported twice in the campus’ GAAP financial statements
(i.e. once by the campus and once by the discretely presented component unit).
Derived GAAP Entry (Period 1-12)
Account
722004(a)
721001
Journal
Description
Class
Fund
(CSU
Account Name
(Net Position)
Program
Fund)
Amount
891-Agency
funds
$200,000
Supplies and Services
20
534
(depository accounts)
Student tuition and fees (net 891-Agency
funds
($200,000)
50
534
of scholarship allowance)
(depository accounts)
Accounting records derived from legal for the receipt of financial aid grants, noncapital and
use of the aid to provide scholarships.
(a) Object code 660045 Student Union Return of Surplus is used in legal for recording payments to student unions
to cover its operating expenses.
Manual GAAP Entry (Period 998)
Account
721001
722004
Journal
Description
4.05.1-7
Class
Fund
(CSU
Account Name
(Net Position)
Program Fund)
Amount
Student tuition and fees (net 891-Agency
funds
$200,000
50
534
of scholarship allowance)
(depository accounts)
891-Agency
funds
($200,000)
Supplies and Services
20
534
(depository accounts)
To eliminate the revenues and expenses related to agency transactions with the student union.
Note: The amount of adjustment would be the amount transferred to the Student Union during
the year.
GAAP Manual | GAAP Adjustments and Reclassification Entries – Revenues and
Expenses: Student Tuition and Fees | June 30, 2015
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RESIDENT ASSISTANT FEE WAIVERS
As a condition of employment, resident assistants who reside on campus are not charged
for housing, which includes lodging and meals. Some resident assistants also receive a
tuition fee waiver for their services. Assuming the campus did not record the charges and
the waivers in their legal accounting records, for GAAP purposes, an adjustment is
required to properly recognize the resident assistant housing and tuition fee waivers as
revenues and compensation expense (benefit provided to resident assistant). Journal entry
is as follows:
Manual GAAP Entry (Period 998)
Account
722002
721006
721001
Journal
Description
5
Fund
(Net Position)
881-Unrestricted
Class
(CSU
Fund)
485
Account Name
Program
Amount
$25,000
Benefits
20
Sales and services of auxiliary
($10,000)
enterprises (net of scholarship 881-Unrestricted
50
485
allowance)
Student tuition and fees (net
($15,000)
881-Unrestricted
50
485
of scholarship allowance)
To record the resident assistant’s housing and tuition fee waivers as revenues and
compensation expense (benefit provided to resident assistant).
REFERENCE TOOLS
TABLES OF OBJECT CODE AND CSU FUND DEFINITIONS
http://www.calstate.edu/SFSR/standards_and_rules/2014/Tables-of-Object-Code-andCSU-Fund-Definitions-Updated-10-30-14.xls
CSU LEGAL ACCOUNTING & REPORTING MANUAL CHAPTER 28 – ACCOUNTS
RECEIVABLE; CHAPTER 35 - FEES
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GAAP Manual | GAAP Adjustments and Reclassification Entries – Revenues and
Expenses: Student Tuition and Fees | June 30, 2015
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REVISION CONTROL
Document Title:
CHAPTER 4.5.1 – GAAP ADJUSTMENTS AND RECLASSIFICATION ENTRIES
– REVENUES AND EXPENSES: STUDENT TUITION AND FEES
REVISION AND APPROVAL HISTORY
Section(s)
Revised
Summary of Revisions
Revision
Date
Tuition and
Fee
Discounting
Previously in Chapter 4.11
April 2015
Revenue
Recognition
Previously in Chapter 4.13
April 2015
Resident
Assistant
Fee Waiver
Previously in Chapter 4.13
April 2015
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GAAP Manual | GAAP Adjustments and Reclassification Entries – Revenues and
Expenses: Student Tuition and Fees | June 30, 2015