COVID-19 Coverage : See how the pandemic is impacting the world of higher education.
Access the Business Officer Magazine menu by clicking or touching here.
Business Officer Magazine logo, click or touch this logo to return to the homepageClick or touch the Business Officer Magazine logo to return to the homepage.
Get back to the Business Officer Magazine homepage by clicking the logo.


Accounting Update

On the Brink

June 2016

By Sue Menditto

Learn More About Offline Reading

The Financial Accounting Standards Board (FASB) has made final decisions on the first phase of its not-for-profit reporting project and will release a new standard in early summer. The accounting update will be effective for independent institutions in FY19.

Meanwhile, the Governmental Accounting Standards Board (GASB) is making great progress on assessing the effectiveness of its current reporting model.

FASB: Ready, Set, Done

One year ago, the FASB issued a proposed Accounting Standards Update (ASU) aimed at improving financial reporting for not-for-profit organizations (NFPs). Based on feedback received on that proposal, FASB decided to divide its redeliberations of the project into two phases. The first phase reconsidered proposed changes that were not dependent on other projects and for which feedback—either positive or negative—was relatively consistent.

The second phase, which may begin as early as the second half of 2016, will involve reconsideration of the proposed changes that are likely to require more time to resolve—most notably, requiring a defined operating measure and realignment of certain line items in the statement of cash flows.

The board has completed redeliberations on Phase 1 of the project, and FASB staff have drafted the final standard, which is expected to be issued this summer. Following is a summary of the tentative decisions reached in Phase 1:

Once the standard has been issued, NACUBO’s Accounting Principles Council will begin to develop examples specific to higher education for use in adopting the standard.

GASB: Governmentwide Comment Period Coming Soon

The GASB is in full swing with a project to assess the effectiveness of its current reporting model, which has been in use for more than 15 years. Throughout 2016, the board has been addressing governmentwide and fund financial statements, with an “invitation to comment” expected later this year. Next up for the Governmental Accounting Standards Board: Business Type Activity Financial Statements.

In December, the board will begin to address operating indicator and presentation alternatives for operating and nonoperating revenues and expenses in business-type activity (BTA) financial statements. Board members and staff have heard from preparers, users, and auditors that the current operating presentation is misleading for stand-alone BTAs, such as public colleges and universities.

NACUBO hopes that GASB will consider alternate presentations for the “Statement of Revenue, Expenses, and Changes in Net Position,” put before the board by its Accounting Principles Council. The figure shows one alternate format that separately displays fee for service (exchange) and support (non-exchange) revenue with subtotals to illustrate how funding impacts operating and business results. Charles Tegen, associate vice president for finance, Clemson University, Clemson, S.C., represents higher education on the project task force. NACUBO will keep institutions informed on GASB’s progress throughout the year.

NACUBO CONTACT Sue Menditto, director of accounting policy, 202.861.2542


Related Topics

The Governmental Accounting Standards Board (GASB) is making progress on assessing the effectiveness of its current reporting model.