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CHAPTER 4.1.3
GAAP ADJUSTMENTS AND RECLASSIFICATION ENTRIES
ASSETS: RECEIVABLES
1
GAAP POLICIES AND PROCEDURES
Below are the various types of receivables recognized by the campus and the Office of the
Chancellor (CO):
Accounts receivable
Accounts receivable of the University generally consists of State appropriations (including
those related to State Public Work Board (SPWB) Lease Revenue Bond Program), discretely
presented component units (mostly recognized auxiliary organizations), student accounts,
government grants and contracts, intra-agency (i.e. other CSU campuses and the CO), and
others. Intra-agency receivables and payables are eliminated at Systemwide level.
Please see Legal Manual Chapter 28, Accounts Receivable for more details related to the
account.
Lease receivable
Lease receivable of the University arise mainly from capital lease agreements with certain
discretely presented component units to lease existing and newly constructed facilities to the
discretely presented component unit.
Notes receivable
Notes receivable of the University arise mainly from note agreements with certain discretely
presented component units to finance existing and newly constructed facilities for the discretely
presented component units. This type of notes receivable is carried in the books of the CO as
the agreement is entered into by the CSU Trustees and the discretely presented component units.
Pledges receivable
Pledges receivable of the University represent promises from donors to make a gift or
philanthropic grant in the future. At the CSU, most of the pledges are managed by discretely
presented component units.
Please see GAAP Manual Chapter 8.7, Pledge Reporting Guidelines for more detailed
information.
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Student loans receivable
Student loans receivable generally do not meet the definition of a current asset, as the related
payments to be received within 12 months of the Statement of Net Position (SNP) date are not
available for liquidation of current liabilities. Therefore, the entire student loans receivable
balance should be classified as a noncurrent asset in the SNP, unless the funds collected on the
receivable are expected to be available for current operations within 12 months.
Policy on Allowance for doubtful accounts
The University maintains an allowance for doubtful accounts for estimated losses inherent in
its accounts receivable based on type of receivables and expectations of repayment. In
establishing the required allowance, management considers one or more of the following: type
of receivable, state guidelines, historical losses adjusted to take into account current market
conditions, the amount of receivable in dispute, the current receivable aging, and current
payment patterns. The University reviews its allowance for doubtful accounts annually. Pastdue balances over 90 days and over a specified amount are reviewed individually for
collectability.
Allowance for doubtful accounts are recorded in legal basis records. Please refer to Legal
Manual Chapter 28, Accounts Receivable for detailed discussions of contra receivable accounts.
Policy on classification of current and noncurrent assets
The University considers its assets to be current if it can reasonably be expected, as part of its
normal business operations, to be converted to cash and be available for liquidation of current
liabilities within 12 months of the SNP date (June 30). All other assets should be considered
noncurrent.
2
RELEVANT ACCOUNTING LITERATURE
GASB Statement No. 33, Accounting and Financial Reporting For Nonexchange Transactions
GASB Statement No. 48, Sales and Pledges of Receivables and Future Revenues and IntraEntity Transfers of Assets and Future Revenue
GASB 62, Codification of Accounting and Financial Reporting Guidance Contained in PreNovember 30, 1989 FASB and AICPA Pronouncements (which covers lease accounting and
classification between current and noncurrent assets.)
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3
OBJECTIVES OF GAAP ADJUSTMENTS
The objectives of the GAAP adjustments necessary at June 30 related to receivables are:
Accounts Receivable
 To record current year net appropriations and appropriations receivable for those funds
appropriated by the State.
 To record the reduction in state appropriations receivable for funds received during the
current year.
 To properly classify accounts receivable between current and noncurrent.
Student Loans Receivable
 To properly classify student loan receivable to Grants refundable account for recognizing
the reserve allowance.
Lease Receivables
 To set up lease receivable (for campus originated capital leases that are non-Systemwide
Revenue Bonds (SRB) related).
 To apply collection of lease payments against lease receivables.
 To properly classify lease receivable between current and noncurrent.
Notes Receivables
 To set up notes receivable (for campus originated note agreements that are non-SRB
related).
 To apply collection of note payments against notes receivables.
 To properly classify notes receivable between current and noncurrent.
Pledge Receivable
 To record pledge receivable at June 30 when the pledge commitments meet all eligibility
requirements (this line item is not available in the legal-basis records).
Allowance for Doubtful Accounts
 To adjust the allowance for doubtful accounts (if necessary).
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4
GAAP ACCOUNTING T REATMENT AND JOURNAL ENTRIES
4.1 RELATED GAAP ACCOUNT(S)
711103 – Accounts receivable, net (current)
711202 – Accounts receivable, net (noncurrent)
711105 – Leases receivable, current portion
711209 – Leases receivable, net of current portion
711110 – Notes Receivable, current portion
711210 – Notes receivable, net of current portion
711106 – Pledges receivable, net (current)
711204 – Pledges receivable, net (noncurrent)
711203 – Student loans receivable, net
4.2 ACCOUNTS RECEIVABLE
Overview
The accounts receivable are mainly recorded in the legal-basis books as mentioned above
and it derives properly to GAAP account 711103 Accounts Receivable, Net, except for
state appropriation receivables, which is recorded only in the GAAP ledger. As such, the
discussion below is focused on state appropriation receivables.
The State appropriates funds to the University on an annual basis. The appropriations are,
in turn, allocated among the campuses by the Systemwide Budget Office. Appropriations
are recognized as revenue/receivable in general when authorization is received and are
reported as either noncapital appropriations when used to support general operations or
capital appropriations when used for capital projects.
In legal basis accounting, state appropriations are allocated to the campuses via allocation
orders and are recorded by campuses as budget entries only. Budget entries are “memo
entries” in legal basis accounting records, and they do not affect a campus’ legal basis
assets, liabilities, revenues, expenses, or encumbrances. Therefore, in these funds
(governmental funds), revenue for appropriations is not recognized on the SAM07 Preclosing Trial Balance.
Appropriated SCO Funds
0001
General Fund
0660*
Public Building Construction Fund
0668*
Public Building Construction Fund Subaccount
6028
2002 Higher Education Capital Outlay Bond Fund (HECOBF)
6041
2004 Higher Education Capital Outlay Bond Fund (HECOBF)
6048
2006 Higher Education Capital Outlay Bond Fund (HECOBF)
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*Funding provided by the State for the construction projects under the Public Work Board
(PWB) program is recorded as state appropriation revenue, capital by the campuses in
GAAP. A corresponding contra state appropriation revenue, capital is recognized by the
CO in order to self-eliminate upon systemwide consolidation. This is not a true state
appropriation, the account is simply used as mechanism to facilitate the consolidation.
Campuses no longer receive allocation orders from the CO related to the Lottery Fund,
and as a result it is no longer reported as state appropriations revenue/receivable in GAAP.
GAAP Accounting Treatment
Current Year State Appropriation
For GAAP financial reporting purposes, current year state appropriations represent a
receivable of the University from the State. A receivable and revenue must be recorded
for GAAP purposes at June 30.
The first step in developing state appropriations revenue is to identify all allocation orders,
de-allocation orders, and allocation orders pending, which make up the total current year
appropriations to the campus. It will be necessary to distinguish the Capital Outlay
allocations from those for the General Fund (0001), because the GAAP adjustments for
these two groups of funds are recorded in different net position categories.
Current year state appropriations to the campus in State fund 0660 and 0668 usually are
for the construction projects funded by the SPWB. Campuses usually recognize this as
state appropriation revenue, capital in GAAP in the current year. In fact, the state will
usually turn around and set up a capital lease arrangement with the CO in subsequent
years.
Additionally, the CO issues Systemwide Allocation Transfers (SWAT) to the campus to
fund special programs. The SWAT’s are mapped to and must be recorded as state
appropriations revenue, noncapital in GAAP. The CO will issue “General Fund
Noncapital Appropriation Support Summary” by campus for each campus to reconcile its
state appropriations revenue, noncapital. This summary is included in the “State
Appropriations Revenue, Noncapital Summary” that is distributed at year-end by the CO
(as discussed in GAAP Manual Chapter 5). Campus will continue to use the “Capital
Outlay Allocations Summary” issued by the CO to reconcile its state appropriations
revenue-capital (also discussed in GAAP Manual Chapter 5).
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The journal entry to record a receivable and revenue from the State for current year
appropriations would be as follows:
State appropriation, noncapital for General Fund (0001)
Account
711103
723001
Journal
Description
Account Name
Accounts receivable, net
(current year net amount)
State
appropriations,
noncapital (current year net
amount)
Program
Class
(CSU
Fund)
Amount
881-Unrestricted
90
001
$X,XXX
881-Unrestricted
50
001
($X,XXX)
Program
Class
(CSU
Fund)
Amount
Fund
(Net Position)
To record FY 201X-1X state appropriation for General Fund (0001).
State appropriation, capital for HECOBF fund
Fund
(Net Position)
Account
Account Name
711202
Accounts
receivablenoncurrent (current year net
amount)
834-Restricted: ExpendableCapital Projects
90
320
$X,XXX
724001
State appropriations, capital
(current year net amount)
834-Restricted: ExpendableCapital Projects
50
320
($X,XXX)
Journal
Description
To record FY 201X-1X state appropriation for HECOBF fund.
Collection of State Appropriation Funds
The collection of the state appropriation funds are recorded in the legal-basis books as a
credit to Fund Balance Clearing (FBC) account as these are actual transactions that have
cleared the State Controller’s Office (SCO) during the fiscal year.
In GAAP, the current year activity (Periods 1 -12) in the FBC account will be reclassified
as a reduction of the Accounts Receivable for Appropriations due from the State. See
related discussion in GAAP Manual Chapter 4 Fund Balance Clearing.
In appropriated funds (governmental funds), the accounts receivable for state
appropriations equals:
Beginning state appropriations receivable (BBA on Tab Run at June 30, 20PY)
+ Current year net appropriations revenue (SRECNP)
- Current year FBC activity (Periods 1-12)
+/- Any other adjustments (e.g. reverted BBA)
= State appropriations receivable at June 30, 20CY
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Other Funds that receive Allocation Orders
In addition to the governmental funds listed above, there are other SCO funds for which
campuses receive allocation orders from the State via the CO. These funds are normally
used for construction of assets from the proceeds of revenue bonds or from net revenues
of auxiliary enterprise operations. An example of such a fund is SCO Fund 0576 (CSU
Funds 221 through 229). While it may appear from review of SCO accounting
information that the campus has received an appropriation for such a fund and
therefore must record appropriation revenue and a State Appropriation receivable,
this is not the proper accounting treatment. See GAAP Manual Chapter 4 Long-Term
Debt Obligation.
4.3 LEASES RECEIVABLE
Overview
Prior to January 1, 2008, to facilitate the debt financing for a discretely presented
component unit construction project, the campus enters into a ground and facilities lease
agreement with the discretely presented component unit prior to the SRB issuance. The
term and payment schedule under the ground and facilities lease agreements mirrors the
term and debt service schedule of the related SRB debt issued by the campus.
Effective January 1, 2008, the campus no longer issues a ground and facility lease
agreement with the discretely presented component units, but rather the CO enters into a
note agreement with the participating discretely presented component unit for financing
debt under the revenue bond or revenue bond anticipation notes program.
GAAP Accounting Treatment
The GAAP accounting treatment is discussed in the memorandum AD06-06, see copy in
Section 5.0 Reference Tools.
Per the memorandum, the ground and facilities lease agreement meets the capital lease
criteria per GAAP. As the lessor in the arrangement, the campus shall recognize Lease
Receivables, Noncurrent in GAAP. This account is not recognized in the legal-basis
books, as such manual GAAP adjusting entries are required.
Below are the GAAP entries, both derived and manual, to record the collection of lease
payments from discretely presented component unit.
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Derived GAAP Entry (Period 1-12)
Account
711101
723006 (a)
Journal
Description
Class
(CSU
Fund)
537
Fund
(Net Position)
881-Unrestricted
Account Name
Program
Amount
Cash and cash equivalents
90
$X,XXX
Other nonoperating Revenue
881-Unrestricted
15
537
($X,XXX)
(Expense)
Accounting records derived from legal for recording periodical lease payments from discretely
presented component unit.
(a) Object code 580098-Auxiliary Program Lease Principal Payment is used in legal for recording the principal payment
on debt issued prior to January 2008.
Manual GAAP Entry (Period 998)
Account
723006
711105
Journal
Description
Fund
(Net Position)
Class
(CSU
Fund)
Fund
(Net Position)
Program
Class
(CSU
Fund)
Amount
881-Unrestricted
90
537
$X,XXX
881-Unrestricted
90
537
($X,XXX)
Account Name
Program
Amount
Other nonoperating Revenue
881-Unrestricted
15
537
$X,XXX
(Expense)
Leases receivable, current
881-Unrestricted
90
537
($X,XXX)
portion
To properly reclassify the principal payment derived from legal basis as reduction of lease
receivable.
Account
Account Name
711105
Leases receivable,
portion
711209
Leases receivable, net of
current portion
Journal
Description
To re-establish the current portion of leases receivable balance.
current
Please refer to Chapter 10, Auxiliary Organizations of the legal manual for more details
about the legal accounting entry.
4.4 NOTES RECEIVABLE
Effective January 1, 2008, there is no ground and lease agreement signed between the
campus and the discretely presented component units for financing the latter’s
construction, refunding of old debt and purchase of capital assets. The note agreement is
actually signed between the discretely presented component units and the CSU Trustees
directly (carried in the books of the CO). The campus may be involved through the
following scenarios:
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a. Acts as a pass-through to collect payments of debt service from discretely presented
component units and to transfer it to the CO (see GAAP Treatment Scenario 1 below).
b. Acts as a capital project manager on behalf of the discretely presented component unit
(see GAAP Treatment Scenario 2 below).
c. No involvement as proceeds and payments of debt service are directly between CO
and discretely presented component units. No campus entries.
GAAP Treatment
Scenario 1 – Campus is acting as an agent only
No manual GAAP adjusting entry by campus is required for the periodic principal
payments from the discretely presented component unit as payments have already been
recorded and derived as other liability in the campus’ legal accounting records. Object
code 250002 "Uncleared Collections" is derived to GAAP account 712109 “Other
liabilities – current”. The CO should create a manual GAAP entry to apply the payments
against Notes Receivable.
Derived GAAP Entry (Period 1-12)
Fund
(Net Position)
881-Unrestricted
Account
711102
Account Name
Short-term investment
712109(b)
Journal
Description
Other liability-current
881-Unrestricted
90
537
($X,XXX)
Accounting records derived from legal-basis books for recording periodical debt service
payments collected from discretely presented component unit.
Fund
(Net Position)
881-Unrestricted
Program
90
Class
(CSU
Fund)
537
Account
712109(b)
Account Name
Other liability-current
711102
Journal
Description
Short-term investment
881-Unrestricted
90
537
($X,XXX)
Accounting records derived from legal-basis books for transferring discretely presented
component unit's debt service payment to the CO.
(b)Object
Program
90
Class
(CSU
Fund)
537
Amount
$X,XXX
Amount
$X,XXX
code 250002-Uncleared collection is used in legal for recording auxiliary debt service payment after the SB 855.
Please refer to the legal manual, Chapter 10, Auxiliary Organizations for more details about
the legal accounting entry.
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Scenario 2 – Campus is acting as a project manager
Discretely presented component unit construction projects after the Senate Bill 855.
Derived GAAP Entry (Period 1-12)
Account
722004
Account Name
Supplies and other services
Fund
(Net Position)
881-Unrestricted
713899
Journal
Description
Fund Balance Clearing
881-Unrestricted
Program
Various
Class
(CSU
Fund)
537
Amount
$X,XXX
90
537
($X,XXX)
Accounting records derived from legal for recording vendor payments.
Manual GAAP Entry (Period 998)
Fund
(Net Position)
881-Unrestricted
Account
711206
Account Name
Other long-term investment
712208
Journal
Description
Other liabilities-noncurrent
881-Unrestricted
90
537
($X,XXX)
To properly record the authority to spend the SRB proceeds and establish liability to the discretely
presented component unit.
Fund
(Net Position)
881-Unrestricted
Program
90
Class
(CSU
Fund)
537
Account
713899
Account Name
Fund Balance Clearing
711206
Journal
Description
Other long-term investment
881-Unrestricted
90
537
($X,XXX)
To properly reclassify construction expenses charged to fund balance clearing recorded in legal
basis to investments.
Account
711208
Account Name
Other liabilities-noncurrent
Fund
(Net Position)
881-Unrestricted
722004
Journal
Description
Supplies and other services
881-Unrestricted
Program
90
Class
(CSU
Fund)
537
Amount
$X,XXX
Amount
$X,XXX
Program
90
Class
(CSU
Fund)
537
Amount
$X,XXX
Various
537
($X,XXX)
To properly reclassify the construction expenses recorded in legal basis to reduce other liabilities.
The CO will provide passdown entries for campuses and their discretely presented
component units that utilized SRB financing. The above examples are simplified in the
GAAP manual. Actual transactions in the passdown entries are more complicated and
require more thoughtful communications between the campus, the discretely presented
component units and the CO.
If the campus is a party to such a transaction, the campus should contact the discretely
presented component units as soon as possible to verify that both parties are properly
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recording the transaction. Additionally, the campus and the discretely presented component
units must also consult with the CO, the independent auditors of the discretely presented
component unit, and the independent auditors of the campus in order to determine 1) the
proper accounting treatment for the transaction and 2) consistency in accounting treatment
within the CSU as a whole.
Note that in certain situations, the total construction costs of the asset may ultimately be
more or less than the SRB issuance amount. In these situations, the campus and the related
discretely presented component units would need to come to agreement on how to handle
the resulting “excess” or “shortfall” and consider this aspect in determining the proper
accounting treatment
In addition to construction, the discretely presented component units is able to participate
in the refunding of its senior bonds through the SRB, also discussed in AD 06-06.
4.5 PLEDGES RECEIVABLE
GASB Statement No. 33 requires that the pledge receivable should be recognized as assets
on the University’s SNP if it meets all applicable eligibility requirements.
Example
In the current year, a donor makes a promise to give the CSU $240,000 each year for five
years starting 06/30/CY. This promise to give is unconditional and can be recorded when
received.
Derived GAAP Entry (Period 1-12)
Account
711101
711103(c)
724002
Journal
Description
(c)Object
4.01.3-11
Account Name
Cash and cash equivalents
Accounts receivable, net
(current)
Grants and gifts, capital
Program
90
Class
(CSU
Fund)
491
Amount
$240,000
881-Unrestricted
90
491
$240,000
881-Unrestricted
50
491
($480,000)
Fund
(Net Position)
881-Unrestricted
Accounting records derived from legal for recording pledge payments from donors.
code 103007-Accounts Receivable-Other is used in legal as pledges receivable is not available in legal.
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Manual GAAP Entry (Period 998)
Account
711106
711204
711103
724002*
Journal
Description
Fund
(Net Position)
881-Unrestricted
Class
(CSU
Fund)
491
Account Name
Program
Amount
Pledges receivable, net (Current)
90
$240,000
Pledges
receivable,
net
881-Unrestricted
90
491
$720,000
(Noncurrent)
Accounts
receivable,
net
881-Unrestricted
90
491
($240,000)
(Current)
Grants and gifts, capital
881-Unrestricted
50
491
($720,000)
To reclassify accounts receivable, net (current) to pledges receivable (current) and to record yearend gross pledges.
*If the pledges are for noncapital purposes, 723002-Gifts, noncapital should be used.
Please refer to Chapter 8.7, Pledge Reporting Guidelines of GAAP Manual, for detailed
discussion of pledge reporting.
4.6 STUDENT LOANS RECEIVABLE
GAAP Treatment
Federally Guaranteed Student Loans
Under the William Ford Direct Loan Program and the Federal Family Education Loan
Program (FFELP), the CSU acts as an agent in disbursing money provided by the lenders
and the Federal government to the students. Accordingly, the direct loan program and
FFELP should be reported as agency transactions; no revenue or expense should be
recognized and the SNP should contain only assets or liabilities for these programs.
Other Loan Programs
The Federal Perkins and Nursing Loan Programs also shall be reported as agency
transactions. Prior to fiscal year 2001/02, these programs were reported as loan programs
with revenues, expenses and net position. However, any cash, investments and receivable
balances that are carried in these programs at the end of the fiscal year are considered to
represent a refundable grant liability to the Federal government, as they must be repaid to
the government if they are not continually loaned out to students.
At a minimum, an allowance for the portion of student loans receivable deemed
uncollectible in the Perkins or Nursing Loan Programs is required for GAAP purposes.
There appears to be some inconsistency in the method each campus uses to obtain this
estimate, but the idea is that a reserve allowance is recorded. One common method used
to estimate the allowance amount at fiscal year-end is to obtain the annual Fiscal
Operations Report and Application to Participate (FISAP) report under Part III-Federal
Perkins Loan Program which contains the loan balances in default 240 or more days
(lines 5.2, 5.3 and 5.4 in the A-133 Input Sheet of TM1 reporting package).
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GAAP entry to recognize the reserve allowance is as follows:
Account
712203
711203*
Journal
Description
Fund
Account Name
(Net Position)
Program
892-Agency funds: Grants
Grants refundable
90
Refundable
Student loans receivable, 892-Agency funds: Grants
90
net
Refundable
To properly record the reserve allowance for the current fiscal year.
Class
(CSU
Fund)
406
406
Amount
$X,XXX
($X,XXX)
*Object code 104015, Allowance Uncollectible Accounts-Student Loans Receivable, derives to 711203, Student loans
receivable, net.
On an ongoing basis, only the incremental change in the allowance from the prior year to
the current year is recorded. The campus may also reverse the gross amount of the GAAP
adjustment from the prior year and record the full amount of the current year uncollectible
allowance as a current year GAAP adjustment if that is more practical.
5
REFERENCE TOOLS
5.1 AD06-06 SYSTEMWIDE REVENUE BOND PROGRAM – AUXILIARY ORGANIZATION
DEBT REFINANCING AND CONSTRUCTION FINANCING
AD06-06.pdf
5.2 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
5.3 CAMPUS PASSDOWN SCHEDULES
http://www.calstate.edu/sfsr/gaap/
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REVISION CONTROL
Document Title:
CHAPTER 4.1.3 – GAAP ADJUSTMENTS AND RECLASSIFICATION ENTRIES
– ASSETS: RECEIVABLES
REVISION AND APPROVAL HISTORY
Section(s)
Revised
4.2.1
4.01.3-14
Summary of Revisions
Removed state fund 0574 from the fund list as it is closed as of
06/30/2015
Revision Date
April 2015
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