Other Manual Highlights and Reminders Sheralin Klinthong, Assoc. Dir., Financial Services / SFSR Evajoy Tito, Manager, Financial Services / SFSR Chancellor’s Office April 24, 2015

Learning Objectives At the end of the session, the participants will be able to: Define the objective of the GAAP Manual Know the location of the GAAP Manual Recognize the contents of the GAAP Manual Identify updates to the GAAP Manual April 2015Year-End GAAP Training2

GAAP Manual - Purpose In order to prepare financial statements in accordance with U.S. generally accepted accounting principles (GAAP), the CSU must convert legal-basis accounting to GAAP basis accounting. The CSU GAAP Accounting and Reporting Manual is designed to guide the user through the conversion process. In addition, it provides information on the preparation for various external audits (i.e. financial statements, IT, A-133 and SRB audits). April 2015Year-End GAAP Training3

GAAP Manual - Location Available in the Systemwide Financial Standards and Reporting (SFSR ) website April 2015Year-End GAAP Training4

GAAP Manual - Contents April 2015Year-End GAAP Training5 Legal to GAAP Conversion 1 Overview 2 Before You Begin 3 Mapping Legal to GAAP 4 GAAP Adjustments and Reclassifications 5 Passdown Schedules 6 Statement of Cashflows 7 YES Reporting Package (TM1) 10 GAAP Preparation Checklist 11 GAAP Financial Reporting Checklists 13 Capital Assets Guide Preparation for Audits 9 Financial Statements Audit 15 Single Audit 16 SRB Audit 17 IT Audit Others 8 Discretely Presented Component Units 12 National Collegiate Athletic Association Agreed-Upon Procedures Requirements 14 GASB Updates 18 SCO GAAP Submission

GAAP MANUAL UPDATES April 2015Year-End GAAP Training6

Chapter 3 Mapping Legal Basis Accounts to GAAP Reporting Model April 2015Year-End GAAP Training7

GAAP Manual Updates – Chapter 3 Removed the following attachments: Matrix 1: CSU Funds Net Position Classification Table Matrix 2: Statement of Net Position (SNP) Matrix 3: Statement of Revenues, Expenses, and Changes in Net Position (SRECNP) Source data of the 3 matrices is available in the SFSR website under Standards and Rules and is updated regularly. Legal Edits Table GAAP Edits Table Table of Object Code and CSU Fund Definitions April 2015Year-End GAAP Training8

GAAP Manual Updates – Chapter 3 (cont.) Source data location April 2015Year-End GAAP Training9

GAAP Manual Updates – Chapter 3 (cont.) Discussion on GAAP FIRMS submission is now included in Chapter 7 GAAP Reporting in YES (TM1) and FIRMS April 2015Year-End GAAP Training10

Chapter 4 GAAP Adjustments and Reclassification Entries April 2015Year-End GAAP Training11

GAAP Manual Updates – Chapter 4 NEW structure Arranged by GAAP Financial Statement line items (vs. by accounting topic) Combined information from Chapters 4, 5 and 7 in the previous year GAAP manual as they relate to specific F/S line item Better correlation with the discussions in the Legal Manual to facilitate GAAP conversion See hand-out on the revised table of contents for Chapter 4 April 2015Year-End GAAP Training12

GAAP Manual Updates – Chapter 4 (cont.) New content layout (see handout for sample ) April 2015Year-End GAAP Training13 Describes the F/S line item Describes the GAAP accounting policies adopted Describes CSU’s procedures based on adopted policies GAAP Policies and Procedures References to the relevant GASB Standards and Pronouncements, GASB FAQs, and GASB Implementation Guide applicable to the F/S line item Relevant Accounting Literature Lists the objectives of the GAAP adjustments Serves as a checklist during the GAAP year-end close Reminder that certain adjustments may have been included in the legal-basis books to avoid duplication in GAAP Objective of GAAP Adjustments

GAAP Manual Updates – Chapter 4 (cont.) New content layout (see handout for sample ) (cont.) April 2015Year-End GAAP Training14 Lists the GAAP accounts rolling up to the F/S line item Discusses the GAAP accounting treatment applied by CSU Includes more discussion on special accounting issues Provides examples of GAAP journal entries, both derived (Period 1-12) and manual (Period 998) GAAP Accounting Treatment and Journal Entries References to the available relevant tools to assist preparers of F/S Includes weblinks, FAQs, GASB standard implementation surveys/questionnaires, etc. (previously in Ch. 7) Reference Tools Lists the updates and changes to the chapter. Revision and Approval History

Question #1 What is the TOOL used to guide preparers of the F/S in converting legal basis accounting to GAAP basis? April 2015Year-End GAAP Training15

Chapter 5 GAAP Adjustments or Reclassifications that Require Information from the Office of the Chancellor April 2015Year-End GAAP Training16

GAAP Manual Updates – Chapter 5 Updated the description of the passdown schedules provided by the CO to include the following: Description of the schedule Purpose and use of the schedule Method of distribution (e.g. via , SFSR website) Added discussion on the new passdown schedule for Pension Obligation per GASB No. 68 April 2015Year-End GAAP Training17

GAAP Manual Updates – Chapter 5 (cont.) Removed detailed discussion of accounting treatment and moved them to appropriate sub- chapters in Chapter 4. Capitalization of Non-Delegated Projects – Capital Assets Systemwide Revenue Bonds – Liabilities Bond Anticipation Notes – Liabilities OPEB – Liabilities Capitalized Interest – Capital Assets April 2015Year-End GAAP Training18

Chapter 6 Statement of Cash Flows April 2015Year-End GAAP Training19

GAAP Manual Updates – Chapter 6 Includes the definition of cash and cash equivalents for Statement of Cash Flows (SCF) purposes. Provides guidance on gross vs. net reporting Added more relevant GASB Comprehensive Implementation Q&A Guide where applicable. Relevant CSU examples and treatment are provided for each activity (operating, noncapital financing). April 2015Year-End GAAP Training20

GAAP Manual Updates – Chapter 6 (cont.) Used actual campus data from FY13/14 The different tabs in the worksheet are as follows: Instructions – provides direction in completing this worksheet Worksheet – where the actual SCF data is located SNP, SRECNP and tabs [A] to [W] – input sheets that will facilitate in completing the SCF See hand-out for the SCF Worksheet April 2015Year-End GAAP Training21

GAAP Manual Updates – Chapter 6 (cont.) “Automated” the worksheet Entries made in the SNP, SRECNP and tabs [A] to [W] will automatically flow into the SCF Worksheet Some of the most common non-cash transactions have also been automated Added more checks and balances throughout the worksheet Includes the PBC and/or TM1 reference on each tab on where to obtain the numbers See hand-out for the SCF Worksheet April 2015Year-End GAAP Training22

GAAP Manual Updates – Chapter 6 (cont.) Integrated the TM1 SCF prepopulated transactions to assist in completing the reporting package Includes the section for “amount paid to escrow” See hand-out for the SCF Worksheet April 2015Year-End GAAP Training23

GAAP Manual Updates – Chapter 6 (cont.) Revision to the Statement of Cash Flows Based on the GASB Comprehensive Q&A Guide (2.19.1): The debt proceeds distributed to component units for capital purposes should be presented as a noncapital financing cash outflows. If the campus distributes the proceeds to the component units, it is not using the proceeds to acquire, construct, or improve its own capital assets. Therefore, the debt should not be considered capital debt for purposes of the Statement of Cash Flows. April 2015Year-End GAAP Training24

GAAP Manual Updates – Chapter 6 (cont.) As a result, the following line items will be presented under the net cash provided by (used in) noncapital financing activities (if related to SRB-Aux activities) Issuance of notes receivable Issuance of capital lease receivable Principal collections on notes receivable Interest collection on notes receivable Principal collections on capital lease receivable Interest collections on capital leases receivable April 2015Year-End GAAP Training25

GAAP Manual Updates – Chapter 6 (cont.) Benefits of using the SCF Worksheet Huge time saver Achieve consistency in preparation of SCF for consolidation purposes Other users such as Finance & Treasury (F&T) usually requires detailed breakdown of cash flows and the SCF will assist them to meet their specific needs Facilitates easier review for audit purposes April 2015Year-End GAAP Training26

GAAP Manual Updates – Chapter 6 (cont.) Final Reminders: NO decimals Use the template as guide. Transactions in the SCF template are not all inclusive. The campus may have “uncommon” transaction. There might be a more accurate way of presenting your cash flows Analyze accounts that typically have non-cash transactions (capital assets, other assets, long- term debt) April 2015Year-End GAAP Training27

Question #2 Under which category in the SCF should the debt proceeds distributed to component units for capital projects be presented? April 2015Year-End GAAP Training28

Chapter 7 GAAP Reporting in YES (TM1) and FIRMS April 2015Year-End GAAP Training29

GAAP Manual Updates – Chapter 7 Old Chapter 7 entitled New GASB Standards Implementation Tools is now incorporated in: Chapter 4 (Service Concession Arrangements and Pollution Remediation Obligation) Chapter 8 (GASB No Component Units) New contents on this chapter: Standard practices and preparation of Reporting Package in Year-End System (YES) (TM1) GAAP FIRMS Submission (previously in Chapter 3) April 2015Year-End GAAP Training30

GAAP Manual Updates – Chapter 7 Year-end System (YES) Reporting Package The YES reporting package is a comprehensive financial statement using TM1 application database Consists of input sheets for the basic financial statements and underlying footnotes for campuses and discretely presented component units Gathered information are used for consolidation of SW financial statements and Statement of Expenditures of Federal Awards (SEFA) Please refer to the presentation slides from the breakout session for further discussion about this new chapter. April 2015Year-End GAAP Training31

GAAP Manual Updates – Chapter 7 This chapter includes the following: April 2015Year-End GAAP Training32 Defines the purposes and use of the YES Reporting Package Purpose of Reporting Package Provides the protocol in requesting access to TM1 (YES) application Accessibility Illustrates the steps taken in the submission and review of reporting package by SFSR and KPMG Logistics for RP Submission

GAAP Manual Updates – Chapter 7 (cont.) This chapter includes the following(cont.): April 2015Year-End GAAP Training33 Lists all the input sheets that needs to be completed Includes the corresponding preparer (i.e. campus vs. SFSR on behalf of the campus) Includes the timing of the input sheet completion based on which reporting package version to which it was assigned YES Input Sheets Summarizes the standard practices (in excel) that are used by SFSR and KPMG in performing review of reporting packages in order to ensure complete and accurate reporting package Serves as self-review checklist prior to submission Standard Practices FAQ’s and tips when using TM1 application Frequently Asked Questions

Chapter 8 Presentation of Component Units April 2015Year-End GAAP Training34

GAAP Manual Updates – Chapter 8 Added the discussion on GASB No. 61 previously in Chapter 4 as this should be used in deciding whether or not a component unit should be blended vs. discretely presented. Added the GASB No. 61 Questionnaire (previously in Chapter 7) as a tool in the decision making. April 2015Year-End GAAP Training35

Chapter 9 Preparation for Financial Audit April 2015Year-End GAAP Training36

GAAP Manual Updates – Chapter 9 Updated PBC List for FY14/15 SW audit Added new and modified existing exhibits or query/report instructions to certain PBC items Please refer to the PBC presentation slides prepared by KPMG and CO for further discussion of the changes. April 2015Year-End GAAP Training37

Chapter 10 & 11 GAAP Preparation and Financial Reporting Checklists April 2015Year-End GAAP Training38

GAAP Manual Updates – Chapters 10 & 11 As a result of the changes in Chapter 4 GAAP Adjustments and Reclassification Entries, the following checklists are modified: GAAP Preparation Checklist GAAP Financial Reporting Checklist Use the updated checklist in complying with the PBC requirements April 2015Year-End GAAP Training39

Chapter 12 NCAA Agreed-Upon-Procedures Requirements April 2015Year-End GAAP Training40

GAAP Manual Updates – Chapter 12 NCAA recently issued the updates to the AUP reporting requirements effective for fiscal year ending June 30, Summary of the updates is included in this chapter for reference. Campus coordinators are requested to work closely with the Athletics Division to ensure compliance with the deliverable and deadline (January 15 th ). April 2015Year-End GAAP Training41

Question #3 GASB No. 61 Questionnaire can now be found in which Chapter of the GAAP Manual? April 2015Year-End GAAP Training42

April 2015Year-End GAAP Training43