GASB Reporting Guidance Expanded to Colleges and Universities

In November, GASB issued standards aligning the external financial reporting model for public colleges and universities with that for state and local governments, which it had substantially revised in June 1999.

GASB Statement no. 35, Basic Financial Statements—and Management’s Discussion and Analysis—for Public Colleges and Universities (see Official Releases, page 109), expands the applicability of Statement no. 34, Basic Financial Statements—and Management’s Discussion and Analysis—for State and Local Governments (see Official Releases, JofA , Oct.99, page 112).

“The board decided to include public colleges and universities under the guidance of Statement no. 34 so that their financial reports would be more useful and understandable,” said GASB project manager Joseph Blythe.

The benefits of uniform reporting also influenced GASB’s decision. Previously, public colleges and universities had their own financial reporting model. But Statement no. 35 enables them to report as “special purpose” governments, and that makes it easier to fold their financial statements into the states’ comprehensive annual financial reports (CAFR).

“In the past,” Blythe said, “states had to employ a separate financial model to report on public colleges and universities. It was awkward because the latter followed the AICPA audit guide model, which uses a different fund structure than a government entity does.”

In addition to the basic financial statements mandated under Statement no. 34, the new standards require that public colleges and universities provide a management overview and analysis, an explanation of changes in financial position and notes to the financial statements.

Statement no. 35 also brings reporting requirements for public colleges and universities in line with those for their counterparts in the private sector, which must depreciate capital costs over the useful life of an asset.

GASB expects this method to offer greater insight into the true cost of providing instruction, research and other services, making it easier to assess the status of public colleges’ and universities’ finances.

Blythe said the first reports to which Statement no. 35 applies generally would be those for the fiscal year beginning July 1, 2001.


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