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CHAPTER 4.4
GAAP ADJUSTMENTS AND RECLASSIFICATION ENTRIES
NET POSITION
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GAAP POLICIES AND PROCEDURES
The campus’ net position is classified into the following categories:
Net investment in capital assets
Capital assets, net of accumulated depreciation, and outstanding principal balances of debt
attributable to the acquisition, construction or improvement of those assets and any related
deferred outflows of resources.
Restricted: Nonexpendable
Net position subject to externally imposed conditions that the University retains in perpetuity.
Net position in this category consists of endowments held by the campus or its related
auxiliaries.
Restricted: Expendable
Net position subject to externally imposed conditions that can be fulfilled by the actions of the
University or by the passage of time.
Unrestricted
All other categories of net position. In addition, unrestricted net position may have legislative
or bond indenture requirements associated with their use or may be designated for use by
management of the campus. These requirements limit the area of operations for which
expenditures of net position may be made and require that unrestricted net position be
designated to support future operations in these areas. Campus housing programs are primary
example of operations that have unrestricted net position with designated uses.
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RELEVANT ACCOUNTING LITERATURE
GASB Statement No. 63 Financial Reporting of Deferred Outflows of Resources, Deferred
Inflows of Resources, and Net Position
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OBJECTIVES OF GAAP ADJUSTMENT
 To identify the different components of the net position and to recognize the transactions
in the appropriate net position category.
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GAAP ACCOUNTING TREATMENT AND RELATED JOURNAL ENTRIES
4.1 RELATED GAAP ACCOUNTS
713811 – Net investment in capital assets
713821 – Restricted: Nonexpendable, endowments
713831 – Restricted: Expendable, scholarships and fellowships
713832 – Restricted: Expendable, research
713833 – Restricted: Expendable, loans
713834 – Restricted: Expendable, capital projects
713835 – Restricted: Expendable, debt service
713836 – Restricted: Expendable, other
713881 – Unrestricted
NET POSITION CATEGORIES
At the time of creation of a CSU Fund, the net position category is assigned based on the
nature of the transactions that would go into that CSU Fund. Although, a campus may
override the net position category of the CSU Fund, a discussion should be held with the
Office of the Chancellor to determine if the override is considered valid. Therefore it is
important that the transactions are accurately recorded in the appropriate CSU Fund as
they will affect the net position category reported in the financial statements.
For more information about the net position category by CSU Fund, please refer to the
GAAP Edits Table as discussed in Chapter 3 Mapping from Legal to GAAP Accounts.
Below are the categories of net position and the nature of the transaction that should be
reported in each.
4.2 NET INVESTMENT IN CAPITAL ASSETS
This net position category represents the campus’ capital assets (include land,
improvements to land, easements, buildings, building improvements, machinery,
personal property, infrastructure, and all other tangible or intangible assets), net of
accumulated depreciation or amortization, and reduced by the outstanding balances of
any debt (e.g. bonds, mortgages, notes, etc.) and other liabilities attributable to the
acquisition, construction, or improvement of those assets. Deferred outflows and inflows
of resources that are attributable to the acquisition, construction or improvement of the
capital assets or related debt should also be included in this component of net position.
If there are significant unspent related debt proceeds or deferred inflows of resources at
the end of the reporting period, the portion of the debt or deferred inflows of resources
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attributable to the unspent amount should not be included in the calculation of the net
investment in capital assets. Instead, that portion of the debt or deferred inflows of
resources should be included in the same net position component (restricted or
unrestricted) as the unspent amount.
4.3 RESTRICTED
Restricted net position category should only include assets that has constraints on its use
that are either externally imposed by creditors or imposed by law through constitutional
provisions or enabling legislation reduced by liabilities and deferred inflows of resources
related to those assets. Externally imposed restrictions may be by creditors, grantos,
contributors, or laws and regulations of other governments, or imposed by constitutional
provisions, or enabling legislation. Enabling legislation authorizes a government to
assess, levy, charge, or otherwise mandate payment of resources (from external resource
providers) and includes a legally enforceable requirement that those resources be used
only for specific purposes. Such restrictions are primarily related to endowments,
scholarships, research, capital projects, loans, and debt service funds. Reserve funds that
are mandated by bond indentures to be set aside to pay debt service and contributions
given by a donor that must be used for a particular purpose are examples of restricted net
assets.
The restricted net position category consists of two subcategories: “Restricted
nonexpendable” and “Restricted Expendable”.
Restricted Nonexpendable
The restricted nonexpendable net position is made up of the permanent endowment
funds, the corpus of which may not be expendable. The principal in a permanent
endowment fund can be invested to generate income, but the principal amount may not
be spent. The nonexpendable portion of the net position is the permanent principal that
must be retained in perpetuity.
Restricted Expendable
Restricted expendable net position represents resources that are subject to external
restrictions on how they may be used. These externally imposed restrictions either expire
by passage of time or can be fulfilled and removed by actions of the campus. Such
restrictions are primarily related to scholarships, research, capital projects, loans, and
debt service funds.
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4.4 UNRESTRICTED
The unrestricted net position represets all other net resources available to the campus for
general and educational obligations. Under U.S. generally accepted accounting
principles, net position that is not subject to externally imposed restrictions governing
their use must be classified as unrestricted for financial reporting purposes.
Although not reported in the basic financial statements (but included in Management’s
Discussion and Analysis) because they are not subject to externally imposed restrictions
per accounting definition, the unrestricted net position category consists of two
subcategories: “Designated” and “Undesignated”.
Designated
The predominant portion of the unrestricted net position are designated for specific
programs or projects related to certain revenue sources. The designated resources are
derived from fee collections and other activities that are designated for very specific
purposes and are not to be repurposed and spent for other activities. For example, students
pay fees including housing and parking fees, campus activity fees, all of which are to be
used for specific designated purposes as described in the Education Code. The campus
also has designated resources that represent amounts pledged to support the Systemwide
Revenue Bonds (SRB) program.
Undesignated
The undesignated unrestricted net position category is the residual net position category,
essentially being the net position items not included in the other categories. The
undesignated portion of the unrestricted net position provide a prudent reserve for
contingencies, such as the uncertain direction of future state appropriations, as well as
the effects of an uncertain economic environment.
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REFERENCE TOOLS
5.1 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
5.2 GAAP EDITS TABLE
http://www.calstate.edu/sfsr/standards_and_rules/
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REVISION CONTROL
Document Title:
CHAPTER 4.4 – GAAP ADJUSTMENTS AND RECLASSIFICATION ENTRIES –
NET POSITION
REVISION AND APPROVAL HISTORY
Section(s)
Revised
Summary of Revisions
New in FY14/15
4.04.1-5
Revision
Date
April 2015
GAAP Manual | GAAP Adjustments and Reclassification Entries – Net Position | June
30, 2015