Financial Reporting Various Chancellor’s Office Presenters April 22, 2015

Financial Reporting

Various Chancellor’s Office Presenters

April 22, 2015

Learning Objective

To provide participants with an overview of the CSU’s reporting processes, inclusive of:

•State legal-basis reporting•GAAP-basis reporting•State GAAP-basis reporting

April 2015 Year-End New Employee Training 2

Wang, Lily

Overview of Financial Reporting

• Reporting cycle begins with closure of the June 30 legal–basis accounts on or about July 15

• Three phases of financial reporting: State legal-basis reporting – campus submission date to SCO

generally July 31 GAAP consolidated reporting for external users of financial

information (e.g. bond holders) – audited financial statements issue date generally October 15

State GAAP reporting – submission of selected consolidated financial data to SCO generally November 1


Presenters• State Legal-Basis Reporting/State GAAP Reporting

Roberta McNiel, CPA

Senior Manager, Financial Systems/Statutory Reporting

• GAAP-Basis Reporting

Sheralin Klinthong, CPA

Associate Director, Financial Reporting and Review

Alice Kim, CPA

Senior Manager, CO Financial Services, Accounting


State Legal-Basis Reporting

What is legal-basis reporting?


State Legal-Basis Reporting (cont.)

• A method of accounting and reporting unique to governmental agencies.• Allows the state legislature to measure a state

agency’s performance against the budgets it enacts.• NOT GAAP


State Legal-Basis Reporting (cont.)• Modified accrual basis of accounting

Revenues are recognized in the accounting period in which they become available and measurable. (Note: full accrual basis of accounting – GAAP – requires recognition when revenue is earned.)

Expenditures are recognized in the accounting period in which the fund liability is incurred, measurable, and expected to be paid within twelve months. (Note: full accrual basis of accounting – GAAP – requires recognition of expenses when they are incurred.)

Modified accrual basis of accounting is not the same as cash- basis accounting.



In which chapter of the CSU Legal and Reporting Manual can you find more information about

CSU’s reporting structure?



Chapter 1, General Information



As an agency of the State of California, the CSU is obligated to comply with the state’s reporting requirements as set forth in the State Administrative Manual (SAM) §7951. Obligation met through submission of prescribed reports to the State Controller’s Office (SCO) prepared on the legal-basis of reporting.



Reporting is accomplished through a combination of an electronic transmission of data and submission of hard copy reports.• Electronic file is referred to as the SAM 99 file. Satisfies data needs

of certain key required reports for governmental funds (primarily the General Fund and general obligation bond capital outlay funds).

• Specified hard copy reports are prepared by each campus for governmental funds and are mailed to the SCO, usually by July 31.



In which chapter of the CSU Legal and Reporting Manual can you find more information about state

legal-basis reporting?



Chapter 5, SCO Reporting

Specifically see Section 4.1.2 for instructions on the submission of SAM 99.



Key hard copy reports include:• Report 14, Report of Accounts Outside the State Treasury• Report 22, Statement of contingent Liabilities• Explanations of Abnormal Balances• Due To/From Other Funds/Other Appropriations Supplemental

Form• Material Variance Explanation Form


State Legal-Basis Reporting (cont.)Report 14, Report of Accounts Outside the State Treasury

Purpose: To report state money held by financial institutions outside the state treasury system. Appendix 14 of the CSU Legal Accounting & Reporting Manual provides the template and completion instructions.

Things to know: Identify at the top of the form all tax identification numbers under

which accounts were OR could be established. List zero balance account held at Wells Fargo and the pooled

investment account (SWIFT) held at U.S. Bank.


State Legal-Basis Reporting (cont.)Report 14, Report of Accounts Outside the State Treasury (cont.)

Things to know (cont..) List any other account(s) opened by the campus (e.g. escrow). Indicate the specific statutory authority for establishing the

account. The Wells Fargo and U.S. Bank accounts are authorized under the Education Code §89721.

If there is no specific statutory authority, cite the Department of Finance approval and date approval received, attaching a copy of the approval letter.



Things to know (cont..):Report book balance, not the balance on the bank statement.Report for each account if the balance requires collateralization or

if collateralization is not required. Collateralization is not required for the zero balance account (Wells Fargo), the pooled investment account (U.S. Bank) and escrow accounts.

Report cash held on behalf of an auxiliary.



Things to know (cont..):Do not report cash-on-hand balances, amounts on deposit with

non-financial institutions (e.g. Pitney Bowes) or accounts closed in prior years.

Must be signed by the Vice President of Administration and Finance or a higher official.



Distribution:Original to State Treasurer’s OfficeHard copy to SCOElectronic copy to SCO


State Legal-Basis Reporting (cont.)Report 22, Statement of contingent Liabilities

Purpose: To disclose estimated liabilities exceeding $300 million, such as pending litigation. Prepared only for a state fund for which such liabilities are identified. Appendix 16 of the CSU Legal Accounting and Reporting Manual provides the template and completion instructions.

Things to know:The liabilities subject to disclosure are not recorded in the campus

books. Include a campus-assigned reference for each listed contingent

liability.April 2015 Year-End New Employee Training 20

State Legal-Basis Reporting (cont.)Report 22, Statement of contingent Liabilities (cont.)

Things to know (cont.):Review by CSU general counsel not needed.

Distribution: Hard copy to SCO for each governmental fund to which it pertains.


State Legal-Basis Reporting (cont.)Explanations of Abnormal Balances

Purpose: To provide written explanations for abnormal general ledger account balances. Appendix 22 of the CSU Legal Accounting & Reporting Manual provides an optional template and the completion instructions.

Things to know: Draft explanations in clear, concise language.

Distribution: Hard copy to SCO for each governmental fund to which it pertains.


State Legal-Basis Reporting (cont.)Due To/From Other Funds/Other Appropriations Supplemental Form

Purpose: To provide the SCO with the organization code associated with transactions reported in state general ledger account numbers 1410XXXX, Due from Other Funds, 3114XXXX, Due to Other Funds (where XXXX is the state fund from which monies are being paid or to which the funds are being sent). Appendix 17 of the CSU Legal Accounting & Reporting Manual provides the template and the completion instructions.


State Legal-Basis Reporting (cont.)Due To/From Other Funds/Other Appropriations Supplemental Form (cont.)

Things to know:Required for every governmental fund included in the SAM 99

where due to/from transactions have been recorded.Form is required even though the transactions net to zero within

the CSU or campus.Where the transaction is between state funds at the campus, report

the organizational code of the campus.


State Legal-Basis Reporting (cont.)Due To/From Other Funds/Other Appropriations Supplemental Form (cont.)

Things to know:Where the transaction is between campuses, report the

organizational code of the campus to which or from which an amount is due.

Distribution:Hard copy to SCOElectronic copy to SCO


State Legal-Basis Reporting (cont.)Material Variance Explanation Form

Purpose: To explain reason(s) for variances in the balances of (1) expenditures, (2) revenue, (3) transfers in and (4) transfers out between the prior and current years which are $1 million or more and are 10% or more. Appendix 21 of the CSU Legal Accounting & Reporting Manual provides the template and the completion instructions.


State Legal-Basis Reporting (cont.)Material Variance Explanation Form (cont.)

Things to know: Required for every governmental fund included in the SAM 99

electronic file and state funds 0890 and 0942 (but only if the campus uses these two funds).

Required to be completed in its entirety, even if the variances do not meet the required thresholds for explanation. Leave explanation sections blank if the thresholds not reached.


State Legal-Basis Reporting (cont.)Material Variance Explanation Form (cont.)

Distribution: Hard copy to SCO.


State Legal-Basis Reporting (cont.)Certifications

Purpose: To provide assurance to the SCO that the data provided in both the SAM 99 electronic file and the hard copy reports are accurate. Certifications are signed by the campus Vice President, Administration & Finance, under the penalty of perjury. Appendix 7 of the CSU Legal Accounting & Reporting Manual provides the templates, one for governmental funds and one for non-governmental funds, and the completion instructions.


State Legal-Basis Reporting (cont.)Certifications (cont.)

Things to know:Must include a complete list of hard copy reports that could be filed

with an indication of whether they are enclosed or not applicable. Reports 18 and 19 (on General Fund certification only) must be listed with the comment “Not required per CSA [California State Auditor] and SCO”.

Since Report 14 is not fund specific, assurance concerning its contents is provided on the General Fund certification.



Things to know:Certification must include:o Campus name and organization codeo Fund name and numbero contact name, phone number and email addresso Name and email address of the campus President and Vice

President, Administration & Finance. This information is required no matter who signs the certification.



Distribution: Signed hard copy to SCO for each state fund included in SAM 99 and for which hard copy reports are being provided.



We have covered the reporting requirements for governmental funds. What are the requirements

for non-governmental funds?



Actually, the reporting requirements for non-governmental funds are exactly the same as for governmental, except that the reports are prepared on a consolidated basis. The CO, not the campus, prepares and submits to the SCO the reports for non-governmental funds based on data campuses have uploaded to FIRMS.



In addition to the data the CO extracts from FIRMS to prepare the consolidated non-governmental

funds reports, what are the 3 supporting schedules the CO requires from campuses to complete those

reports?



• Non-governmental Fixed Assets Template (Appendix 11)

• Report 22, Statement of contingent Liabilities (Appendix 16)

• Due To/From Other Funds/Appropriations Supplemental Form (Appendix 17)

These 3 forms, prepared for non-governmental funds, are submitted to the CO, not the SCO.



Non-governmental Fixed Assets TemplateData provided used to fulfill the SCO’s

requirement to associate fixed assets with the original funds that financed the acquisitions.

Template requires provision of cost and accumulated depreciation for tangible and intangible assets by specified non-governmental fund.



Report 22, Statement of contingent LiabilitiesSame form as discussed at slides 21 – 22.Required for each non-governmental fund to

which it pertainsFor purposes of this submission, there is no

reporting threshold.


State Legal-Basis Reporting (cont.)Due To/From Other Funds/Appropriations Supplemental FormSame form as discussed at slides 24 – 26 for interagency

transactions recorded by the campus as of June 30; separate template at Appendix 17 for unrecorded interagency transactions.

Frequently pertains to state fund 0948 and includes transactions not only within the CSU, but between the CSU and other state agencies.

Regarding unrecorded transactions in non-governmental funds:o CO will report the transactions to the SCO.o CO will solicit interagency transaction information from the

Department of Justice (DOJ) and will report the accrual to the SCO. Campuses should not record the accrual as of June 30.


State Legal-Basis Reporting (cont.)Due To/From Other Funds/Appropriations Supplemental FormRegarding unrecorded transactions in non-governmental funds

(cont.):o For interagency transactions with all other state agencies,

complete the Unrecorded Transactions tab at Appendix 17. Include: Name and organization code of other state agency contact information for other state agency Amount due to or due from the other state agency State fund in which the other state agency is recording the

transaction.



Confused???!!!???!!!

Appendix 13, Legal Reports Submission Checklist, in the CSU Legal Accounting & Reporting Manual provides a summary of required reports and where they go. Also provides addresses of recipient agencies.



Questions???


GAAP Reporting

What is GAAP reporting?


GAAP ReportingThe legal basis of accounting (modified-accrual basis) required by

the State of California is not consistent with the U.S. generally accepted accounting principles (GAAP) which is full-accrual basis.

GASB Statement No. 34 Basic Financial Statements – and Management’s Discussion and Analysis – for State and Local Governments, and GASB Statement No. 35, Basic Financial Statements – and Management Discussion and Analysis – for Public Colleges and Universities, redefined the accounting and reporting requirements for public universities like the CSU.


GAAP Reporting (cont.) Government Code Section 12440.1(c) eliminated the requirement for campus

stand-alone financial statements beginning fiscal year 2011-2012. As a public university, the CSU has been directed to follow the reporting

guidance for special-purpose governments engaged only in business-type activities. The basic financial statements and required supplementary information consists of the following:

a. Management's Discussion and Analysis (MD&A)

b. Basic Financial Statements Statement of Net Position (balance sheet) Statement of Revenues, Expenses, and Changes in Net Position (income statement) Statement of Cash Flows Notes to the Financial Statements

c. Supplementary Information (financial statements of the 23 campuses)


GAAP Reporting (cont.) The basic financial statements include the 23 campuses and the Office of the

Chancellor reported under the “University” column and 92 discretely presented component units (University-related recognized auxiliary organizations) reported under “Discretely Presented Component Units” column.

In order to prepare financial statements in accordance with GAAP, a conversion process from legal-basis to GAAP-basis is necessary. The CSU GAAP Accounting and Reporting Manual is designed to take the user through this process. Here is the link to the Manual: http://www.calstate.edu/SFSR/Workshops/index.shtml

The audited financial statements are posted on the SFSR webpage, here is the link: http://www.calstate.edu/SFSR/GAAP/financial_statements.shtml


http://www.calstate.edu/SFSR/Workshops/index.shtml



http://www.calstate.edu/SFSR/GAAP/financial_statements.shtml

http://www.calstate.edu/SFSR/GAAP/financial_statements.shtml

GAAP Reporting (cont.)


What is CSU’s tool to provide guidance in the conversion of legal

basis to GAAP reporting?

GAAP Reporting (cont.)GAAP Manual Structure:


Legal to GAAP Conversion

• 1 – Overview• 2 – Before You Begin• 3 – Mapping• 4 – GAAP

Adjustments• 5 – Passdown • 6 – SCF• 7 – YES (TM1)• 10 & 11 – Checklists• 13 – Capital Assets

Guide

Preparation for Audits

• 9 – Financial Statements Audit

• 11 – Single Audit• 16 – SRB Audit• 17 – IT Audit

Others

• 8 – Discretely Presented Component Units

• 12 – NCAA AUP Reporting

• 14 – GASB Updates• 18 – SCO GAAP

Submission

GAAP Reporting (cont.)Master Timeline http://www.calstate.edu/SFSR/Workshops/index.shtml





Preparation Timeline (from campus perspective)


•Review/ Update PY’s audit issues

•Reverse GAAP adjustment

Jan –May Preparation

Fix issues (Legal/GAAP mapping)

June - July

GAAP

Derivation

•Leadsheet • Footnotes• GAAP adjustments

July 15-Aug 15

Prepare PBC List

•TM 1•Submit PBCs on the SharePoint

August 23- Sep 5

Update TM1


PBC (Prepared by Client) List can be found in the SFSR website

http://www.calstate.edu/SFSR/GAAP/2014-2015/GAAPManual/index.shtml





GAAP Adjustments and Reclassification

Resources: GAAP manual Chapter 4-GAAP adjustments and reclassification

• Permanent adjustments

Required to reflect for GAAP reporting purposes accounting activity that is always recorded differently, not at all, or only under the legal basis of accounting. Such adjustments may result in a change to net position. An example of a permanent adjustment is depreciation.

Examples: Reclassifications and Eliminations



GAAP Adjustments and Reclassification

• Timing Adjustments (set as reversal)

Required for accounting activity that is recorded under the legal basis of accounting as well as under GAAP basis, but at different times. Such adjustments typically result in the creation of an accrued asset and/or liability and probably a change in net position. Their effect must be reversed next year in the process of deriving legal activity to GAAP basis activity

Examples: Accounts Payable Accrual entries



Required ChartFields for GAAP entries

Resource: CSU GAAP manual chapter “MAPPING LEGAL BASIS ACCOUNTS TO GAAP REPORTING MODEL”

April 2015 Year-End New Employee Training55

Account Fund Program Class

RULE GAAP Account

Net PositionCategory

Program Code

CSU Fund

Example 722004 881 04 485








Create GAAP Adjustment Journal entries (Chancellor Office’s model)• Business Unit: COGAP • Journal ID: assigned CYxxxx • Date: 6/30/20CY • Long Description: Preparer Initial – Journal Description • Source: GPA • Journal Class: ADJ • Period: Adjusting Period 998 • Reversal (if reversing): Adjustment Period with 7/1/FY date




Example of GAAP entries



What is program code of Cash and Cash Equivalent GAAP account

(711101)?


Create PBC 46 Cash Leadsheet utilizing CFS data warehouse

• FIRMS-GAAP→ FIRMS Summary (3 Columns)• Report Filters:

• Fiscal Year 2013• Period: 12• FOC: 101004 & 101006 (which includes both cash and cash

equivalents, current and non-current)



PBC 46 Cash Leadsheet – Legal Balance

• FIRMS-GAAP→ GAAP Actuals• Report Filters:

• Fiscal Year 2013• Period: 998-998• Acct: 711101 & 711201 (which includes both cash and cash

equivalents, current and non-current)


PBC 46 Cash Leadsheet – GAAP ADJ



• Populate data results(Legal balance and GAAP ADJs) on Cash Leadsheet to be submitted to KPMG as PBC 46• But FIRST! Tie it out… Lead Sheet Summary

(Report CSUFS167)




PBC 46 Cash Leadsheet

GAAP Reporting (cont.)Passdown Journal Entries / Information The entries or information provided relate to transactions managed centrally by the CO

that are either not in the campus’ legal-basis accounting records or have been recorded by the campus on a legal basis, but which need to be reclassified for GAAP basis reporting. Below is a list of passdown schedules available to campuses:

a. SRB related journal entries

b. Investment Held by CO

c. Capital Outlay Allocation

d. State Appropriation Revenue, Non-Capital

e. CSU Forward Purchases

f. Transaction with Related Parties

g. Investment Pool

h. Other Post –Employment Benefits

i. Pension Obligation



YES (TM1) Reporting Package The YES reporting package is a comprehensive financial statements

template using TM1 application database for data collection. It consists primarily of input sheets for the basic financial statements and underlying footnotes for both campuses and discretely presented component units.

Refer to Chapter 7 of the GAAP manual for the accessibility, input sheets, reporting package generation, and standard practices.

These are consolidated to generate the SW financial statements. This is also submitted to KPMG as PBC001.


GAAP Reporting (cont.)Submission of PBCs in SharePoint

This is the centralized repository of all Prepared By Client (PBC) schedules for purposes of the SW F/S audit, Single Audit, and SRB Audit.

Below is the link to past training presentation discussing the access and navigation of the SharePoint site.

http://www.calstate.edu/sfsr/workshops/2013/GAAPPresentations.shtml No confidential information should be uploaded to this site.


http://www.calstate.edu/sfsr/workshops/2013/GAAPPresentations.shtml





Where is the centralized location for PBC schedules?

GAAP Reporting (cont.)The Systemwide Financial Standards and Review (GAAP) at the CO oversees the GAAP reporting process and external audits (i.e. financial statements and single audits).

Webpage: http://www.calstate.edu/sfsr/gaap/Email: [email protected]

SFSR GAAP Team contact List:


Sedong John Director 562-951-4577

Sheralin Klinthong Associate Director 562-951-4548

Evajoy Tito Manager 562-951-4531

Criselle Espiritu Financial Reporting Analyst 562-951-4394

Su Chen Financial Reporting Analyst 562-951-4637

http://www.calstate.edu/sfsr/gaap/

http://www.calstate.edu/sfsr/gaap/

mailto:[email protected]

SCO GAAP ReportingLike the CSU, the state issues its form of GAAP-based financial statements, referred to as the Comprehensive Annual Financial Report or CAFR.

The CSU and the State of California employ entirely different GAAP reporting models. The CSU uses the business-type activities (or BTA) model, which consolidates all fund activities; the state uses a reporting model that distinguishes between governmental and business-type activities, requiring the CSU to provide them with financial data at the state fund level.

The state uses the CSU’s audited consolidated financial statements in its preparation of the CAFR, but requires certain elements of those statements to be broken down by state fund.


SCO GAAP Reporting (cont.)

Where does the guidance regarding SCO GAAP reporting reside?



In Chapter 18 of the GAAP Manual. The chapter details the purpose of the various templates used to collect the fund data required by the state and includes the actual templates.



Can you name some of the 8 templates campuses are required to submit to the CO?


SCO GAAP Reporting (cont.)They are:• Legal to GAAP Reconciliation (for governmental funds)• Reconciliation of Due To/From Accounts• Reconciliation of Transfers• Capital Assets and Accumulated Depreciation

Worksheet/Depreciation Expense Schedule• Pollution Remediation Obligations Detail• Breakdown of Statement of Cash Flows• Calculation of Net Investment in Capital Assets• Other Liabilities Detail



• The first 5 schedules listed on the previous slide are in Excel format and are submitted to the CO at the State Reporting SharePoint site.

• The last 3 schedules listed on the previous slide reside in TM1 and are completed by campuses in that application.



• Each template is accompanied by a set of detailed instructions. Instructions for the TM1 schedules can be found in Chapter 18.

• The instructions for each template indicate what the data must tie to (generally numbers reported in FIRMS and TM1).



What does the CO do with all this data?

It is consolidated, reconciled to the audited financial statements and submitted to the state for incorporation into the CAFR.



Questions????


Financial ReportingSheralin, Alice and I thank you for attending this session and hope you found it valuable. Don’t hesitate to contact us if you have questions after returning to your campus.

Sheralin Klinthong, [email protected], 562-951-4548

Alice Kim, [email protected], 562-951-4627

Roberta McNiel, [email protected], 562-951-4668





www.calstate.edu


http://www.calstate.edu/

Documents

Financial Reporting Various Chancellor’s Office Presenters April 22, 2015