.
C HAPTER 1
O VERVIEW
H
ISTORY
1994 In 1994, a legislative mandate required that independent financial statement audits be performed of five of the California State University (CSU) campuses. These audits represented the first ever financial statement audits performed at any CSU campus.
The financial activities of the CSU are included in the special revenue funds of the State of
California’s financial statements. Prior to the audits mentioned above, the CSU’s financial statements were subjected only to audit procedures performed in conjunction with the
State’s financial statement audit.
The legislative mandate mentioned above required that five campuses be audited for the fiscal year ending June 30, 1994 and an additional five campuses for the fiscal year ending
June 30, 1995 (a total of 10 in 1995).
1996 In September 1996, Assembly Bill No. 2613 (AB 2613) was passed requiring the financial statement audits be expanded to include an audit of the CSU system as a whole, as well as at least 10 campuses individually each year. Specifically, the campus audit requirements required that at least ten individual campus financial statements be audited on a stand-alone basis each year, with each campus being subjected to a stand-alone financial statement audit at least once every two years. This requirement became effective beginning in fiscal year 1996-97.
The campuses of the CSU currently maintain their financial records on the legal basis of accounting required by the State of California. The legal basis of accounting is not consistent with U.S. generally accepted accounting principles (GAAP). AB 2613 requires that the audited financial statements be presented in accordance with GAAP.
The CSU has successfully complied with the requirements of AB 2613 since its passage.
This GAAP Manual has been developed to assist CSU personnel in the conversion of legal basis records to financial statements prepared in accordance with GAAP.
1999 In November 1999, the Governmental Accounting Standards Board issued Statements
No. 34 (GASB No. 34), Basic Financial Statements – and Management’s Discussion and
Analysis – for State and Local Governments , and No. 35 (GASB No. 35), Basic Financial
Statements – and Management Discussion and Analysis – for Public Colleges and
Universities . These statements redefined many of the accounting and reporting requirements for public universities. The effect of these standards was significant, requiring sweeping changes in the format and content of GAAP financial statements.
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2002 The CSU was required to implement the requirements of GASB No. 35 for the fiscal year ending June 30, 2002.
The Financial Standards Advisory Committee (FSAC), made up of CSU campus and systemwide personnel, has examined the requirements of GASB No. 35 and subsequent
GASB statements. In the Fall of 2000, the FSAC began taking steps to ensure the accurate interpretation and implementation of the new requirements at the CSU. Much of the guidance found in this GAAP Manual is the result of implementation decisions made by the FSAC.
2011 Government Code Section 12440.1(c) changed the financial reporting requirements for the
CSU system and its universities beginning fiscal year 2011-2012. The new legislation eliminates the requirement for campus stand-alone financial statements. Instead, the statement of net assets, statement of revenues, expenses, changes in net assets, and statement of cash flows of each campus shall be included as an addendum to the annual
Systemwide audit. Summary information on transactions with auxiliary organizations for each campus shall also be included in the addendum.
2012 In fiscal year 2012-2013, the CSU has implemented the requirements of the following
GASB pronouncements.

GASB Statement No. 60, Accounting and Financial Reporting for Service Concession
Arrangements, Issued November 2010. Effective for periods beginning December 15,
2011.
The objective of this Statement is to improve financial reporting by addressing issues related to service concession arrangements (SCAs), which are a type of public-private or public-public partnership. As used in this Statement, an SCA is an arrangement between a transferor (a government) and an operator (governmental or nongovernmental entity) in which (1) the transferor conveys to an operator the right and related obligation to provide services through the use of infrastructure or another public asset (a "facility") in exchange for significant consideration and (2) the operator collects and is compensated by fees from third parties. Additional guidance can be found in Chapter 4.02 of this GAAP Manual.

GASB Statement No. 61, The Financial Reporting Entity: Omnibus, an amendment of
GASB Statement No. 14 and 34 , Issued November 2010. Effective for periods beginning after June 15, 2012.
This Statement modifies certain requirements for inclusion of component units in the financial reporting entity. Additional guidance can be found on Chapter 8.

GASB Statement No. 63, Financial Reporting of Deferred Outflows of Resources,
Deferred Inflows of Resources, and Net Position, Issued June 2011. Effective for periods beginning after December 15, 2011.
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This Statement provides financial reporting guidance for deferred outflows of resources and deferred inflows of resources. Concepts Statement No. 4, Elements of Financial
Statements , introduced and defined those elements as a consumption of net assets by the government that is applicable to a future reporting period, and an acquisition of net assets by the government that is applicable to a future reporting period, respectively.
Concepts Statement 4 also identifies net position as the residual of all other elements presented in a statement of financial position. This Statement amends the net asset reporting requirements in Statement No. 34, Basic Financial Statements—and
Management's Discussion and Analysis—for State and Local Governments, and other pronouncements by incorporating deferred outflows of resources and deferred inflows of resources into the definitions of the required components of the residual measure and by renaming that measure as net position, rather than net assets. Net position category net invested in capital assets, net of related debt will now be called “net investment in capital assets”.
Much of the changes made on this GAAP Manual are a result of the implementation of this new GASB standard. Additional guidance can be found in Chapter 4.02.

GASB Statement No. 65, Items Previously Reported as Assets and Liabilities, Issued
March 2012. This is effective for periods beginning after December 15, 2012 (for CSU, effective for fiscal year 2014; CSU elected early implementation in fiscal year ended
June 30, 2013 ).
This Statement establishes accounting and financial reporting standards that reclassify, as deferred outflows of resources or deferred inflows of resources, certain items that were previously reported as assets and liabilities and recognizes, as outflows of resources or inflows of resources, certain items that were previously reported as assets and liabilities. This Statement also provides other financial reporting guidance related to the impact of the financial statement elements deferred outflows of resources and deferred inflows of resources, such as changes in the determination of the major fund calculations and limiting the use of the term deferred in financial statement presentations. Additional guidance can be found in Chapter 4.03 of this GAAP Manual.
C ONVERTING FROM L EGAL B ASIS A CCOUNTING TO GAAP – AN O VERVIEW
The State of California continues to require the CSU to report campus and system activities using the legal basis of accounting. In order to prepare financial statements in accordance with GAAP, a conversion process is necessary. This process is outlined under the following sub-sections and is explained in greater detail in the chapters that follow. This manual is designed to take the user methodically through the conversion process.
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C
HAPTER
2
–
B
EFORE
Y
OU
B
EGIN
Please refer to the Legal Manual at the “Year-End Legal GAAP Reporting Workshop” page on the Systemwide Financial Standards and Reporting website at http://www.calstate.edu/SFSR/Workshops/index.shtml
for year-end legal basis closing instructions. They are not included in this manual.
C HAPTER 3
–
M APPING L EGAL B ASIS A CCOUNTS TO GAAP R EPORTING M ODEL
Chapter Three describes the first step in the conversion process, which is the mapping of SCO funds, CSU fund (SCO sub-funds), object codes and program codes as reflected in the legal basis financial records to specific net position categories and line items in the GAAP basis financial statements.
C HAPTER 4
–
GAAP A DJUSTMENTS AND R ECLASSIFICATIONS
Chapter Four describes the timing and permanent adjustments necessary to complete the conversion from legal basis to GAAP. These adjustments include, among others, accruals for compensated absences and faculty salaries, accounting for capital leases, adjustments to fund balance clearing, accounts payable accruals, unearned revenues, depreciating or amortizing capital assets, discounting tuition, and accrual for pollution remediation obligation.
In addition, this chapter addresses other accounting issues that are relevant to the preparation of the financial statements, including the classification of assets and liabilities as current and noncurrent.
C HAPTER 5
–
GAAP A DJUSTMENTS OR R ECLASSIFICATIONS THAT R EQUIRE I NFORMATION
FROM THE
O
FFICE OF THE
C
HANCELLOR
Chapter Five summarizes the adjustments that are passed down from the Office of the
Chancellor to the campuses. These adjustments include but are not limited to the current year activities relating to Systemwide Revenue Bonds and Bond Anticipation Notes, investment income accrual, unrealized gain/loss on investment, pension obligation, and other postemployment benefits obligation.
C HAPTER 6
–
S TATEMENT OF C ASH F LOWS
GASB No. 35 introduced a new financial statement to public universities – the Statement of
Cash Flows (SCF). The SCF is prepared using the direct method. This chapter provides detailed instructions and sample template to assist in the preparation of the SCF as well as identifying source documents to obtain the necessary data for the statement.
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C
HAPTER
7
–
GAAP R
EPORTING IN
YES (TM1)
AND
FIRMS
Chapter Seven provides information on the preparation of YES (TM1) reporting package. A reporting package template and a list of standard practices that are commonly used by the reviewers at the CO are included in this chapter. Additionally, GAAP data reporting in FIRMS is also discussed in this chapter.
C HAPTER 8
–
P RESENTATION OF C OMPONENT U NITS
Chapter Eight includes reporting instructions to discretely presented component units (mostly auxiliary organizations) and their external auditors. These instructions are presented in a memorandum to campus Presidents and Chief Financial Officers. These instructions identify the audit requirements of the component units, as well as, the supplementary information reporting requirements.
Additionally, this chapter provides guidance on reconciling balances between the campus and the component units and coordinating the preparation and inclusion of the component unit’ financial statements within the reporting package. Additionally, this chapter also includes various other matters related to the component units (i.e. FIRMS/IPEDS reporting, accounting for underwater endowments, pledge reporting, fair value measurement and disclosure, and contributed services).
C
HAPTER
9
–
P
REPARING FOR THE
F
INANCIAL
S
TATEMENTS
A
UDIT
Chapter Nine is designed to provide the user with an understanding of how to prepare for a successful financial statements audit. This chapter discusses the roles of the independent auditors and campus personnel in the audit process. It also lists various terminology specific to the audits as well as the CSU. Prepared by Client (PBC) listings, sample lead schedules, and the reporting package template are all presented in this chapter.
C
HAPTER
10 – GAAP P
REPARATION
C
HECKLIST
Chapter Ten includes a checklist that should be utilized as each of the conversion and preparation steps are completed. Each step in the checklist refers the user to the relevant chapter(s) in this manual where the item is addressed. The checklist is divided between Part A and Part B.
C
HAPTER
11
–
GAAP F
INANCIAL
R
EPORTING
C
HECKLIST AND
D
ATA
I
NTEGRITY
F
ORM
Chapter Eleven provides a checklist to be used in the final stages of preparing financial statements for an audit. Each step in the GAAP financial reporting checklist is designed to identify common mistakes or to ensure that amounts are consistent among financial statements and footnotes. Each step refers the user to the relevant chapter(s) in this manual where the item is addressed. Additionally, this chapter summarizes the requirement of the GAAP data integrity form that is required for the SCO GAAP submission covered in Chapter 18. A template that is to be used is also included in this chapter.
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C
HAPTER
12
–
NCAA A
GREED
U
PON
P
ROCEDURES
(AUP) R
EQUIREMENTS
Chapter Twelve summarizes the financial reporting requirements of the National Collegiate
Athletics Association (NCAA) for the member campuses.
C HAPTER 13
–
C APITAL A SSETS G UIDE
Chapter Thirteen is devoted to the Capital Assets Guide, which summarizes the policies and guidelines of the CSU under GASB reporting standards.
C HAPTER 14
–
GASB U PDATES AND O THER I NFORMATION
This Chapter is to be used to include updates received at future dates into the manual and to discuss new GASB pronouncements.
C
HAPTER
15
–
P
REPARING FOR AN
O
FFICE OF
M
ANAGEMENT AND
B
UDGET
(OMB)
C IRCULAR A-133 A UDIT
Chapter Fifteen is designed to provide the user with an understanding of how to prepare for a successful OMB circular A-133 audit. A-133 PBC listings and sample schedules are all presented in this chapter.
C HAPTER 16
–
SRB A UDIT R EQUIREMENTS
Chapter Sixteen is designed to provide the user with an understanding of what, when and why requirements are needed for a successful Systemwide Revenue Bond (SRB) audit. Special instructions for the SRB fluctuation analysis, SRB required lead schedules and the GAAP entries query are all presented in this chapter.
C HAPTER 17
–
P REPARING FOR THE I NFORMATION T ECHNOLOGY (IT) A UDIT
Chapter Seventeen is designed to provide the user with an understanding of how to prepare for a successful IT Audit. IT Audit PBC listing is all presented in this chapter.
C HAPTER 18
–
S TATE C ONTROLLER
’
S O FFICE (SCO) GAAP S UBMISSION
Chapter Eighteen is designed to detail the SCO’s GAAP submission requirements and to describe the supplemental information required from campuses in late September each year.
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B
USINESS
-T
YPE
A
CTIVITIES
(BTA) R
EPORTING
M
ODEL
As a public university, the California State University (CSU) has been directed, in GASB No. 35, paragraph 27, to follow guidance provided for special-purpose governments. Accordingly, under this guidance (GASB No. 34, paragraphs 134-141), public universities can report as one of the following:

Special-purpose governments engaged only in business-type activities (BTA);

Special-purpose governments engaged only in governmental activities; or

Special-purpose governments engaged in both governmental and business-type activities
The evaluating criterion for the use of one of these models depends on the university’s ability to levy taxes and its dependence on the adoption of detailed annual budgets by fund. If a university’s primary activities were financed through taxes, intergovernmental revenues, such as grants and contracts, and other nonexchange transactions, the university would likely adopt the model for special-purpose governments engaged in governmental activities. On the other hand, those universities that receive state appropriations and also cover a portion of their costs through external user charges for services may use the model for special-purpose governments engaged only in business-type activities. Finally, those universities that have the ability to levy taxes and also have activities that charge fees to external users could choose to use the model that combines both governmental and business-type activities. This model is the one utilized by general-purpose governments, such as states, cities, and counties.
Consistent with the majority of public colleges and universities, the CSU chose to adopt the reporting model for special-purpose governments engaged in only BTA.
For BTA’s, the basic financial statements and required supplementary information consist of the following (GASB No. 34, paragraph 138):
1.
Management’s Discussion and Analysis (MD&A)
2.
Basic Financial Statements a.
Statement of Net Position b.
Statement of Revenues, Expenses and Changes in Net Position c.
Statement of Cash Flows d.
Notes to the Financial Statements e.
Required Supplementary Information on Modified Approach, if elected
1.
M ANAGEMENT
’
S D ISCUSSION AND A NALYSIS
Management’s Discussion and Analysis (MD&A) should introduce the basic financial statements and provide an analytical review of the university’s financial activities. A brief discussion of the basic financial statements and the information they provide as well as analysis of the university’s overall financial position, major debt and capital asset activities and currently known facts that are expected to affect the university’s future financial position are required in this section.
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2.
B
ASIC
F
INANCIAL
S
TATEMENTS
The following statements should be presented using the economic resources measurement focus and the accrual basis of accounting. a.
S
TATEMENT OF
N
ET
P
OSITION
This statement reports the university’s assets, deferred outflows of resources, liabilities, deferred inflows of resources, and net position. The statement of net position displays assets, plus deferred outflows of resources, less liabilities, less deferred inflows of resources, equals net position and should be displayed in three broad components – net investment in capital assets; restricted; and unrestricted (As amended by GASB 63, paragraph 8). Assets and liabilities must be classified between current and noncurrent. For the purposes of distinguishing between current and noncurrent assets/ liabilities, current assets/liabilities are those that can be reasonably expected to either use or generate cash through liquidation thereof, as part of normal business operations, within one year of the financial statement date.
Current portions of accrued compensated absences must be estimated based upon amounts
“used” in the previous year.
Pension and other postemployment benefit obligation will be calculated and passed down from the Office of the Chancellor.
In distinguishing between cash and cash equivalents and investments on the Statement of
Net Position, investments that are used for current operations should be classified as shortterm investments. The CSU determined that the following are generally classified as shortterm investments:

Local Agency Investment Funds (LAIF)

Surplus Money Investment Funds (SMIF)

Systemwide Investment Fund - Trust (SWIFT)
Investments (including those listed above) that are 1) restricted for withdrawal or use for other than current operations (i.e. endowments or Perkins loans), 2) designated or restricted for the acquisition or construction of noncurrent assets, 3) designated or restricted for the liquidation of the noncurrent portion of long-term debt, or 4) restricted as to the liquidity of the investments should be classified as other long-term investments. (ARB 43; ¶ chapter
3A)
All demand deposits and highly liquid investments with an original maturity date of three months or less should be classified as cash and cash equivalents. Uninvested funds included in SWIFT and the Common Fund Short Term Fund should be classified as investments.
Deferred outflows of resources include loss on refunding, which is part of the pass-down entries from the Office of the Chancellor.
Deferred inflows of resources include deferred service concession arrangement receipts.
Refer to GAAP Manual Chapter 4.02 and Chapter 5.00 for further details.
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Net Position should also be classified in the following categories:
Net investment in capital assets – Includes capital assets (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 bonds, mortgages, notes, other borrowings or liabilities that are attributable to the acquisition, construction, or improvements of those assets. Deferred outflows of resources and deferred inflows of resources that are attributable to the acquisition, construction, or improvement of those assets or related debt also should 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 attributable to the unspent amount should not be included in the calculation of 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 (GASB 63, paragraph 9).
Restricted – This category should only include assets that have restrictions that are externally imposed reduced by liabilities and deferred inflows of resources related to those assets (GASB No. 63, paragraph 10). Externally imposed restriction may be by creditors, grantors, contributors, or laws and regulations of other governments, or imposed by constitutional provisions or enabling legislation (GASB No. 34, paragraph 34). Examples are 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.
Unrestricted – This category includes the net amount of the assets, deferred outflows of resources, liabilities, and deferred inflows of resources that are not included in the determination of net investment in capital assets or the restricted component of net position
(GASB 63, paragraph 11). Designations of unrestricted net position should not be reported on the face of the statement of net position, but may be presented in the notes to the financial statements if desired by the university.
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. b.
S
TATEMENT OF
R
EVENUES
, E
XPENSES
,
AND
C
HANGES IN
N
ET
P
OSITION
This statement is the operating statement of the university. Revenues are required to be reported by major source (net of any discounts or allowances). This statement also must distinguish between operating and nonoperating revenues and expenses. The following are the categories of the CSU’s operating and nonoperating revenues and expenses:
Operating Revenues
Fees and tuition (net of scholarship allowances and bad debt allowances) – Includes mandatory tuition fees paid by students, such as fees paid at the time of registration, lab fees and other fees for educational purposes by the student to attend the CSU or a particular class. Items, such as childcare fees, bowling alley fees and the like should not be included in this category. Scholarship allowances are discussed in greater detail in Chapter 4.5.
Grants and contracts, non-capital – Includes all amounts for which eligibility requirements were met on non-financial aid grants and contracts from federal, state, local or private agencies that will be used for non-capital purposes. Examples for the CSU include research and development grants and Head Start program grants.
Sales and services of educational activities (net of bad debt allowances) – Includes revenues that are related incidentally to the conduct of instruction, research and public services and revenues of activities that exist to provide an instructional and laboratory experience for students and that incidentally create goods and services that may be sold to students, faculty, staff and the general public. Examples of revenues of educational activities are intercollegiate athletic revenues, film rentals, sales of scientific and literary publications, testing services, sales of products and services of dairy creameries, food technology divisions and poultry farms.
If sales and services to students, faculty, or staff, rather than training or instruction, is the purpose of an activity, the revenue should be classified as sales and services of auxiliary enterprises, as described further below.
Sales and services of auxiliary enterprises (net of scholarship allowances and bad debt allowances)
– An auxiliary enterprise is an entity that exists to furnish goods or services to students, faculty or staff and charges a fee directly related to, although not necessarily equal to, the cost of the goods or services. The distinguishing characteristic of auxiliary enterprises is that they are managed as essentially self-supporting activities . Examples include residence halls, food services, intercollegiate athletics (if essentially selfsupporting), college stores, faculty clubs, faculty and staff parking and faculty housing.
The general public may be served incidentally by auxiliary enterprises. Activities, such as subsidized child-care centers, travel agencies, bowling alleys and barbershops may not be self-supporting and should therefore not be included in this category. This should be evaluated, to the extent considered significant, on a case-by-case basis. Netted against these
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. revenues should be any scholarship allowances. This is discussed in greater detail in
Chapter 4.05.
Other operating revenues – This category should include all sources of revenues not included in other classifications that pertain to the current primary operations of the CSU.
Examples would be subsidized childcare centers, travel agencies, bowling alleys and barber shops that are not considered self-supporting. Moreover, cost recovery between campuses and external parties including auxiliary organizations is also included in this category. Cost recovery between campuses is eliminated at the systemwide level. GASB No. 34,
Paragraph 102 states that a consideration for defining operating revenues and expenses is how individual transactions would be categorized for purposes of preparing a Statement of
Cash Flows using GASB Statement No. 9. Transactions for which cash flows are reported as capital and related financing activities, noncapital financing activities, or investing activities normally would not be reported as components of operating income.
Operating Expenses
Instruction – This category should include expenses for all activities that are part of an institution’s instruction program, with the exception of expenses for remedial and tutorial instruction, which should be categorized as student services. Expenses for credit and noncredit courses, for academic, occupational, and vocational instruction, and for regular, special, and extension sessions should be included. Expenses for departmental research and public service that are not separately budgeted should be included in this classification.
Expenses in an academic department which are primarily administrative in nature (e.g., academic deans) should not be included in this category but in academic support.
Research – This category should include all expenses for activities specifically organized to produce research outcomes. This category includes expenses for individual and/or project research as well as that of institutes and research centers. This category does not include all sponsored programs (for example, training grants should be included in public service) nor is it necessarily limited to sponsored research, since internally supported research programs, if separately budgeted, might be included in this category.
Public service – This category should include funds expended for activities that are established primarily to provide non-instructional services beneficial to individuals and groups external to the institution. These activities include community service programs
(excluding instructional activities) and cooperative extension services. Examples of activities that belong to this category are conferences, institutes, general advisory services, reference bureaus, radio and television, consulting, and similar non-instructional services to particular sectors of the community.
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Academic support – This category should include funds expended primarily to provide support services for the institution’s primary missions – instruction, research, and public service. It includes: (1) the retention, preservation, and display of educational materials
(e.g., libraries, museums, and galleries); (2) the provision of services that directly assist the academic functions of the institution, such as demonstration schools associated with a department, school, or college; (3) media, such as audiovisual services, and technology(e.g., computing support); (4) academic administration (including academic deans, but not department chairperson(s),) and personnel development that provides administrative support and management direction to the three primary missions; and
(5) separately budgeted support for course and curriculum development. For institutions that currently charge certain expenses (e.g., computing support) directly to the various operating units of the institution, these expenses are not reflected in this category.
Student services – This category should include funds expended for offices of admissions and registrar and those activities whose primary purpose is to contribute to the student’s emotional and physical wellbeing and to their intellectual, cultural, and social development outside the context of the formal instruction program. It includes expenditures for student activities, cultural events, student newspapers, intramural athletics, student organizations, intercollegiate athletics (if the program is operated as an integral part of the department of physical education and not as an essentially self-supporting activity), supplemental educational services to provide matriculated students with supplemental instruction outside of the normal academic program (e.g.; remedial instruction), counseling and career guidance (excluding informal academic counseling by the faculty), student aid administration, student health service (if not operated as an essentially self-supporting activity), and enrollment management.
Institutional support – This category should include expenses for: (1) central executivelevel activities concerned with management and long-range planning of the entire institution, such as the governing board, planning and programming, and legal services;
(2) fiscal operations, including the investment office; (3) administrative data processing;
(4) space management; (5) employee personnel and records; (6) logistical activities that provide procurement, storerooms, printing, and transportation services to the institution;
(7) support services to faculty and staff that are not operated as auxiliary enterprises; and
(8) activities concerned with community and alumni relations, including development and fund raising.
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Operation and maintenance of plant – This category should include all expenses for the administration, supervision, operation, maintenance, preservation and protection of the physical plant. It includes all expenses for operations established to provide services and maintenance related to grounds and facilities, such as janitorial and utility services; repairs and ordinary or normal alterations of buildings, furniture, and equipment; care of grounds; maintenance and operations of buildings and other plant facilities; security, earthquake and disaster preparedness; fire protection, safety, hazardous waste disposal, pollution remediation, property, liability and all other insurance relating to property; space and capital leasing; facility planning and management, central receiving, and similar items.
Interest expense on capital related debt and depreciation on capital assets should not be recorded in this category.
Student grants and scholarships – This category should include expenses for direct payments of grants and scholarships to students. It includes expenses for scholarships and fellowships from restricted or unrestricted funds in the form of grant to students, resulting from selection by the institution or from an entitlement program. This category also includes trainee stipends, prizes, and awards. It should also include institutional loan cancellations.
Auxiliary enterprises – This category includes all expenses relating to the operation of auxiliary enterprises, including expenses for operation and maintenance of plant, and for institutional support related to the auxiliary enterprise revenues; also included are other direct and indirect costs, whether charged directly as expenditures or allocated as a proportionate share of costs of other departments or units.
Depreciation and amortization – This category includes depreciation and amortization on all capital assets, tangible and intangible, recorded by the university.
Nonoperating Revenues (Expenses)
State appropriations, non-capital – This category includes amounts received from, or made available to, an institution by legislative acts to support operations. For the CSU, this would include appropriations received for the general funds. SWAT’s (Systemwide
Allocation Transfers) to the campus to fund special programs as a result of RMP should also be included in this financial statement line item. Refer to Chapter 4.05 for more details about RMP changes. This category does not include governmental grants and contracts except the State University Grant (SUG) and State Educational Opportunity Program
(SEOP).
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Financial aid grants, noncapital – This category includes Federal, State, Local, and
Nongovernmental financial aid grants that the CSU have administrative involvement and are nonexchange transactions. It includes all amounts for which eligibility requirements were met, such as Pell Grant, Cal Grant, Federal Supplemental Education Opportunity
Grant (FSEOG), Work Study, and SMART grant, etc.
Other Federal nonoperating grants, noncapital – This category includes other Federal grants CSU has received that are nonexchange and nonfinancial aid related. The major program recorded in this line was the one time State Fiscal Stabilization Fund (SFSF) and federal subsidies which partially reimburse certain systemwide revenue bond’s interest expenses provided by Build America Bonds program (BABs) under the American
Recovery and Reinvestment Act (ARRA).
Gifts, non-capital – Includes contributions received for non-capital purposes, such as for research or to subsidize a particular program of the university.
Investment income (loss), net – Includes investment income or loss, dividends, realized gains or losses and changes in unrealized gains or losses on non-endowment assets.
Investment expenses, such as investment service charges and interest payback to the State from no longer remitting the student fees to the State are netted against this revenue.
Endowment income (loss) – This category includes investment income or loss and any realized gains or losses and changes in unrealized gains or losses on endowment assets.
Interest expense – This category includes all interest expense related to both noncapital and capital related debts.
Other nonoperating revenues (expenses) – Any revenues or expenses that do not directly relate to the CSU’s current primary operation should be recorded here. This category includes items that do not fit into one of the operating revenue (expense) categories above.
Examples include lottery income, gain (loss) on sales or disposal of assets, CSURMA dividends, revenue from legal settlements, prior period corrections and other miscellaneous revenues or expenses.
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Other Line Items
State appropriations, capital – This category includes amounts received from, or made available to an institution by legislative acts for capital purposes. For the CSU, this would include capital outlay appropriations.
Grants and gifts, capital – This category would include federal, state, or private grants, contracts, and gifts that are for the purchase of equipment or the construction of a building or facility. Examples of such items are grant funds received from the Federal Emergency
Management Agency (FEMA) to reconstruct buildings, or private contributions to purchase computers or buy library books. This category would also include any donated assets received by the university, such as computer equipment, software, etc.
Additions (reductions) to permanent endowments – This category would include any private contributions received by the university to increase or establish a permanent endowment fund and losses resulting from underwater endowments. For most CSU campuses, campus foundations, not the university, receive contributions for endowments. c.
S TATEMENT OF C ASH F LOWS
This statement classifies cash activities into four categories – operating activities, noncapital financing activities, capital financing activities, and investing activities. Under
GASB No. 34, the direct method of cash flows is required. For the statement of cash flows preparation process and requirements, please refer to Chapter 6. d.
N
OTES TO THE
F
INANCIAL
S
TATEMENTS
The notes to the financial statements provide additional information that is essential to the full understanding of the financial statements. For footnote disclosure requirements, please refer to the campus reporting package template in Chapter 7.
1.00-15 GAAP Manual | GAAP Manual Overview | June 30, 2015

.
R
EVISION
C
ONTROL
Document Title: C HAPTER 1
–
O VERVIEW
R EVISION AND A PPROVAL H ISTORY
Section(s)
Revised
Section II
Summary of Revisions
 Removed reference to Year-End Instructions in the Legal manual in
“Chapter Two – Before You Begin”

Added descriptions for Chapter Seven – GASB Standards
Implementation Tools and Chapter Twelve – NCAA Compliance as these are new chapters this year.
Revision
Date
April 2014
Converting from Legal
Basis
Accounting to
GAAP – An
Overview
 Changed Chapter Seven to GAAP Reporting in YES (TM1) and
FIRMS from GASB Standards Implementation Tools
April 2015
1.00-16 GAAP Manual | GAAP Manual Overview | June 30, 2015