financial reporting workshop march 26, · 2014-03-25 · financial reporting workshop march 26,...

Financial Reporting Reporting Workshop

hMarch 26, 2014

Workshop AgendaTime Topic

8:30 FY 2013 AFR Highlights

9:30 State Comptroller Review

10:30 15 Minute Break

10:45 AFR Software Update

12:00 Lunch Break12:00 Lunch Break

1:00 Financial Reporting in 2014

2:30 Net Position Balance Sheet Categories

3:30 15 Minute Break

3:45 Cash Flow Statement Adjustments3 45 j

FY 2013 AFR Highlights

Teresa Bass, CPAComptroller Comptroller

Texas A&M System Office

Overall Desk Review Improved in 2013

2013 Consolidated AFR

AFR Consolidated Statements as Handout Consolidated Flux SRS-RF reducing Grant Activity on their AFR from $80.8

M i FY 2012 t $59 3 M f FY 2013M in FY 2012 to $59.3 M for FY 2013 SAO Audits SACS Reviews SACS Reviews TASSCUBO Research function increased from $656 M to $700 MResearch function increased from $656 M to $700 M Analysis of Review Points Member Desk Reviews Outsourcing Impacts on the Financial Statements

Consolidated Flux

Legislative Appns-decrease 33%, TFS $17.8M g pp 33 , 7reduction attributable spending Add’l Appns for Fire Bills also impacted AP by $210.7 M

CIP Asset-decrease 40% closing CIP project, TAMU, TAMUG, TAMIU, WTAMU, TAMUC, HSCD f d O tfl /C t/NC Li biliti i Deferred Outflow/Current/NC Liabilities-increases due to Law School purchase

Compensable Leave $500k decrease due to Compensable Leave-$500k decrease due to Outsourcing

Consolidated Flux, cont.

Tuition/Fees-22% increase attributable to TAMU /and HSC enrollment, TAMUT, TAMUCT, TAMUSA

Hospital Revenue-New Line item HSC patient income

Federal PT Revenue-262% increase, TFS $83.2M fi bill2011-2012 fire season bills

COGS-$9M decrease, outsourcingP f i l F & S i $ M i Professional Fees & Services-$34M outsourcing, TAMU/TAMUC/PVAMU, TAMIU related to Gear Up Grant TAMUCT Ellucian contract Grant, TAMUCT Ellucian contract

Consolidated AFR & MD&A

Statement of Net Position Investments Receivables Capital Assets Capital Assets Payables Other line items need analysis Net Position

Stmt of Revenues, Expenses & Changes in Net i iPosition

Operating Revenues Functional Expenses Functional Expenses

Consolidated AFR & MD&A, cont.

Stmt of Revenues, Expenses & Changes in Net Position, cont. Operating Revenues Functional Expenses Functional Expenses NonOperating Section Transfers

Statement of Cash Flows Operating Activities Non-Capital Financing Capital & Related Financing Reconciliation Reconciliation Non-Cash Section

SAO Audits

Send notifications to Teresa & Tracy Seeing similar issues across the members We want to help, we can contact SAO

R i d All D k R i & C lid ti P Reviewed All Desk Reviews & Consolidation Process Net Position Classifications-Account Setups

SEFA SEFA TAMUT-Student Financial Aid mostly cash basis due to

eligibility requirements. TAMU helpedg y q p Ag Extension-Federal Appropriations recorded, SAO claimed

revenue analysis used due to the workpapers, CFDA analysis

R t ti L tt i ifi tl diff t Representation Letter significantly different

SACS Review

TAMU/HSC/ Since these entities were consolidated an additional SACs was

required Several questions related to the Law School Several questions related to the Law School

TAMUC Very smooth Very smooth

TAMUSA Working through the accreditation processg g p Financial Statements being audited now

TASSCUBO

Accounting Principles Committee-Service Center g pWhite Paper We have been researching our service center process

hi i f f i b fi l ffi d f This is a source of confusion by our fiscal offices and users of the financial data

We are moving towards a different solutiong Tracy will walk us through some options

TASSCUBO, cont.

Tax Update Given at February Meeting by Texas p y g yTech 1098T’s-originally IRS was going to penalize for incorrect SSN,

appears they will pass on penalties need more accurate date appears they will pass on penalties, need more accurate date for students

Participant Payments-1099s must be issued if over $600 Challenge to Manage Need to ensure gather SSN to issue 1099s

Business Expenses to be excluded from income need Business Expenses to be excluded from income need accountable plan defined We are working through this issue

TASSCUBO, cont.

JP Morgan presented on Fraud Preventiong p FBI reports cost is $18-20 Billion annually ACH Fraud frequency is low, must ensure safety of the account

and routing numbers for vendors and employeesand routing numbers for vendors and employees Positive Pay best tool to help prevent fraud Checks have the most risk for fraud-ability to duplicate our y p

checks, number of points a check can be stolen Move as many vendors/employees to ACH Physical controls on checks Physical controls on checks Dual controls added were possible

Shredding documents important

TASSCUBO, cont.

Legislative Update Many new representatives in the Texas House this biennium State Comptroller’s Office plays an important role in providing

the legislature with Revenue Estimatesthe legislature with Revenue Estimates Recommending restoring formula funding Consider General Obligation Consider funds from the Rainy Day fund Outcome based funding being considered Need to keep up with technology to stay relevant Need to keep up with technology to stay relevant Texas considered removing Algebra II as a requirement to

graduate from high school; however still required at i i i f hi h dinstitutions of higher ed

Analysis of Review Points-79% Blue Ribbon

•Members with <5 Review Pts -31% •TTITVMDL•TVMDL

•TFS•TEES•HSCSC•SO/SRS

•Members between 6-10 Rev Pts-48%•TAMUKTAMU/TAMUG•TAMU/TAMUG

•TAMUT•Ag Extension•TAMIU•TAMUCT•TAMUSA•TEEX•WTAMU•WTAMU•Research Foundation

Happy System Office AFR Team!!

Member AFR Review Process

Reviews went well As members continue to improve begin focusing on bigger As members continue to improve begin focusing on bigger

accounting theory issues and less focus on the checklist because the statements depict the position of entity

Common Issues Still Present Clearing Accounts Service Centers Accruals and accurate account controls Staff being reduced and requirements haven’t changed Strong Reconciliation team needed Strong Reconciliation team needed

Improved fluctuation explanations this year Math plus explanations Math plus explanations Still had to ask for some additional explanations

Outsourcing-Impact on Financial StatementsStatements

Slight reduction in S&W, decrease Inventory, COGS, OPEB, increase in Other Expenses (custodial)

Most members Set up separate Service Center Accounts –Building Maintenance Landscape & CustodialBuilding Maintenance, Landscape & Custodial All invoices paid in these 3 accounts Expenses are allocated to departments– E&G, Auxiliaries, pe ses a e a ocated to depa t e ts &G, u a es,

Agencies, & Affiliated/Outside entities Recognize Revenue when expenses are allocated Allocation based on cost per building provided by

Chartwells-Works well for Building Maintenance & Custodial, not so much for Landscapep

Outsourcing, cont.

Building Maintenance accounts were setup to track expenses for services provided by SSC that are not part of monthly contract amount. Routine/Preventative over $5K Routine/Preventative over $5K

Treatment of Bonuses Dining Contract – Established three types of accountsg Co t act stab s ed t ee types o accou ts Designated Account for personnel staying on payroll Designated Account for expense allowance

Outsourcing, cont.

Dining Contract, cont. Auxiliary Account for Outsourced Contract track student meal Auxiliary Account for Outsourced Contract-track student meal

plans which are charged to the students through the Student System then charged to this account.

P d d i h d f Payments made to vendor with a true-up at end of semester Student meal plans recorded as revenue 0053-Sales of Food

Plans and payments to vendor 0399-Non-TAMU Contract Vendor Refunds

Dining charges from the departments paid by the departmentTAMU is collecting and remitting sales tax for the meal plan TAMU is collecting and remitting sales tax for the meal plan

sales that are charged on student accounts-common?

System Office Desk Reviews

Tracy CrowleySenior Manager Financial ReportingSenior Manager, Financial Reporting


Desk Reviews

Great job Responsive to questions Responsive to questions Prompt with Point Log Responses

Year-End Confirmations went smoothlyy Due to/From’s Transfers

R b if h C h Fl T f b C h Fl Remember to verify the Cash Flow Transfers tab to Cash Flow statement

Pass-Thru’s

State Pass-Through Schedule (SPTR) Problems with certification, Intra-System activity should be

lid ili it t bl t tif i SPTRa valid reconciling item, were not able to certify in SPTR

Desk Reviews, cont’d.

Service Department Activityh f Fewer points on this for FY13

Adjustment made to correct function Profit reclassified from negative expense to revenue Profit reclassified from negative expense to revenue

Tuition Discounting Very nice, few problemsy p Student Financial Assistance tied to SEFA Recommend comparing Tuition Discount % from PY for

reasonableness if % changes significantly could mean there reasonableness, if % changes significantly could mean there is a problem with the discount calculation

Cash Flow Statement Adjustments missedj Discuss in more detail later in today’s presentation

Notes Worksheet

Revised Notes Worksheet went well Worksheet Changes in FY13

Changed from member-specific to standard worksheet Revised some notes and removed some that were not needed Revised some notes, and removed some that were not needed Removed Note 4 Short Term Debt Removed Note 6 Bond Indebtedness

R d N Fi i l R i E i (i f i Removed Note 19 Financial Reporting Entity (information gathered from GASB 14/39 survey)

Common Problems Found During Reviews Description of Lease missing from Note 8, Operating Leases Note 5 Long Term Liabilities did not match balance sheet Receivable/Payable amounts per Note 24 did not match Receivable/Payable amounts per Note 24 did not match

balance sheet

Note 8 Leases

Include a description of the leased asset on the Notes worksheet Required to disclose, by property type, the value of assets

financed through a long-term capital lease and assets financed through a long term capital lease, and assets leased to others for rent

Sample FY13 Note 8

Fixed Asset Transfers

Fixed Asset Transfers Problems balancing with non-TAMUS Texas agencies Documentation provided (SPA entries or spreadsheet for

non-TAMUS external to external transfer) did not match non TAMUS external to external transfer) did not match financial statement totals Documentation required for all non-TAMUS transfers with

other State agenciesother State agencies Transfer with SPA user requires SPA entry Transfer with non-SPA external user requires External to

E t l t f k h t External transfer worksheet Looking to add supporting schedule for N-2 that breaks

down transfers by asset type, this will help us in preparing consolidated asset transfer schedule for SPA

New Account Control for Artwork

Added new GL (089744) and account control (1744) to solve problem with non-depreciable and depreciable artwork commingled in 089745-1745 NEW 089744 Museums/Collections Non Depreciable NEW 089744 Museums/Collections-Non-Depreciable NEW Account Control 1744 Program run to move non-depreciable from existing g p g

089745-1745 to new 089744-1744

This change eliminates some manual entries Plan to update title from Museums/Collections to

Works of Art/Historical Treasures

Payable Categories

Accounts Payable and Other Payables Manual payables for outsourcing accrued as Other Payable Manual payables for outsourcing accrued as Other Payable

instead of Accounts Payable Use correct account control for year-end accruals

Accounts Payable 2100 Accounts Payable through A/P Module 2101 Accounts Payable – Manual 2101 Accounts Payable Manual

• Payable for goods & services received• Includes payables created through YR217 process• Manual entries for payables not encumberedManual entries for payables not encumbered

Other Payable 2195 Other Payables

Used onl hen pa able does not fit an other categor• Used only when payable does not fit any other category

2125 Student Liabilities, refunds owed to students, total $7M

Receivable Categories

Accounts Receivable and Other Receivablesd d d l f h bl h Required to provide details for Other Receivables in the Notes

worksheet Use correct account control for year-end accrualsy

Accounts Receivable 1300 Accounts Receivable through A/R module 1312 Departmental Receivables Manual 1312 Departmental Receivables – Manual

• Receivable for goods & services provided• Year-end accruals for depart’l receivables outside of A/R module

Oth R i bl Other Receivables 1395 Other Receivables

• Used only when receivable does not fit any other category• Included some receivables for Private or Other contracts, most are

placing this in Accounts Receivable

Bad Debt Expense

Problems with relating Bad Debt Expense contra g prevenue to correct revenue stream Be careful to select the appropriate Bad Debt Expense code

RevenueContra Bad Debt Expense Allowance

Tuition Revenue 6310 - Tuition 1397 Student Receivables3 397

Fee Revenue 6316 – Fees 1397 Student Receivables

Net Professional Fees 6311 – Professional Fees 1396 Accounts Receivable

Other Sales Revenue 6312 Other Sales 1396 Accounts ReceivableOther Sales Revenue 6312 – Other Sales 1396 Accounts Receivable

Other Grants & Contracts

6313 – Contracts & Grants, Private and Other

1396 Accts Receivable, or1399 Other Receivable

Gift R 6 Pl d 8 Pl d R i blGift Revenue 6314 - Pledges 1398 Pledge Receivable

State Grant Pass-Through RevenueState Grant Pass Through Revenue

Operating vs. Non-Operating Noticed during AFR reviews that the USAS code per

FMQuery for State Pass-Through revenue sometimes did not match the operating statement categoryp g g y

FY 2012 reported 100% of State Pass-through revenue as operating, in FY 2013 reported $67.9M in Operating and $7 1M in Nonoperating$7.1M in Nonoperating

Consolidated Exhibit IVState Grant Pass‐Through 2013 2012Operating 67,912,751.50 75,288,158.15 Non‐Operating 7,116,762.80 ‐ Total 75,029,514.30 75,288,158.15Total 75,029,514.30 75,288,158.15

State Grant Pass-Through Revenue, cont’d.State Grant Pass Through Revenue, cont d.

$7.1M State Pass-Through Revenues reported as Non-Operating were nearly all from THECB Examples included Top 10% Scholarships and College Work

Study ProgramStudy Program Inconsistentcy, most members reported as Operating

Researching which State Pass-Through’s should g gbe reported as Non-Operating

UT System’s row titled “State Nonexchange Pass-Through” increased this year from $4.7M to $31M

Did something change?

Agency Funds Reporting

Improve Consistency Balance Sheet Funds Held for Others Balance Sheet – Funds Held for Others

Review balance in Agency funds and determine if any portion should be reported as Non-Current For example, Foundation Endowments held on your books

Reclassify to Non-Current Liabilities section Use account control 2712 and post reclassification entry in p y

Agency Fund GL• Debit GL 5700 - Year End Fund Balance Reclassification• Credit GL 2712 – Non-Current Assets Held for Other

Cash Flow Statement Workpaper pulls in net change in Agency Funds Some are making adjustments to reflect total Some are making adjustments to reflect total

additions/deductions

AFR Review Checklist Changes

Based on items identified during AFR reviews, a few items will be added to the review checklist Total Depreciation/Amortization per Additions column of

N-2 should match the operating statementN 2 should match the operating statement Problems with FFX depreciation not reflected in FRS

Verify there are outstanding items entered on the R ili i f A H ld B SReconciliation of Assets Held By System Everyone should have outstanding checks to report

Review Other Revenues and Other Expenses for preasonableness

Compare CY and PY Reimbursements Due from State Treasury significant changes will require explanationTreasury, significant changes will require explanation Should include Revolving Receivable activity only

Questions?

T C t ll ’ Offi Texas Comptroller’s Office AnalysisAnalysis

Teresa Bass, CPA

St t C t ll & SAO AFR State Comptroller & SAO AFR ReviewReview

Wally Lankford was our new Financial Reporting Analyst

Less foc s on USAS Less focus on USAS More focus on accounting theory

SAO SEFA Audit SAO SEFA Audit

FY 2013 CAFR Completed

Fi l 2013 CAFR A il bl Fiscal 2013 CAFR Available Online Texas Comprehensive Annual Texas Comprehensive Annual

Financial Report (CAFR)

Timeline System Offices submits

consolidated report by Nov. 20th

Respond to Comptroller inquiries Respond to Comptroller inquiries in December and January

CAFR is completed in February or Marchor March

New Edits in CANSS System

New edits in the CANSS System caused members to not be able to certify If an asset is deleted, CANSS requires a corresponding

deletion in the depreciation sectiondeletion in the depreciation section Even though could have disposed before depreciation was

calcuatedI th Additi l th t th D i ti In the Additions column, the amount per the Depreciation row cannot be higher than the related row in the Assets section An adjustment to the depreciation calculation could have

caused this issue

USAS Certification Form

After submitting the USAS certification forms, members k d h h kb i were asked to correct the checkboxes on question 1

The USAS box should not be checked since Benefits Paid on Behalf are on the GR recon and not in USAS on Behalf are on the GR recon and not in USAS (Corrected form shown below)

Questions about Note 22

Note 22 - Donor Restricted Endowmentsd h l i Required to report the “cumulative net appreciation on

investments of donor-restricted endowments available for authorization for expenditure”

Hi i ll h d h A i i R hi h Historically, we have reported the Appreciation Reserve, which is the accumulated realized gains/losses

State Comptroller disagreed, and we changed this year’s Note 22 to reflect the unrealized fair value for True Endowments22 to reflect the unrealized fair value for True Endowments

Expendable vs. NonExpendable Net Position Nonexpendable classification is only appropriate when the net

position is required to be retained in perpetuity (for example position is required to be retained in perpetuity (for example, endowment corpus)

Comptroller’s Office has stated the unrealized belongs in expendablep

Revised Note 22

Net Appreciation of Donor-Restricted Endowments

Donor-Restricted Amount of Reported in Endowments Net Appreciation* Net Position

True Endowments 36 193 118 75$ Restricted for ExpendableTrue Endowments 36,193,118.75$ Restricted for Expendable

* The current year fair value adjustment was $995,858.13.

$36M Net appreciation represents the unrealized fair value for True endowments (decrease from original $108M)

Potential Change for reporting in FY14 Potential Change for reporting in FY14 Unrealized gains for True Endowments reported as

Expendable instead of NonExpendable Discuss in more detail later with the Net Position topicDiscuss in more detail later with the Net Position topic


Note 8 – Capital Leases Operating Lease Rental Revenue Operating Lease Rental Revenue

CY actual lease payments received exceeded the PY expected lease payments for FY13 by $1.4MInput from Members to determine cause of variance Input from Members to determine cause of variance New leases Revenue estimate did not include new contract

In the sample below, the $25k predicted for FY14 should be reasonably close to the actual received this year

Current Year RevenueCurrent year revenue for operating lease rentals 35,499.96

Lease Fiscal Year Revenue

2014 25 374 962014 25,374.96 2015 20,833.30


Note 29 – Deferred Outflows of Resources Note 29 – Deferred Outflows of Resources TAMU’s purchase of Wesleyan Law School led to the early

implementation of GASB 69, Government Combinations d i l f iand Disposals of Government Operations

Resulted in reporting a Deferred Outflow for the difference between the purchase price and the assets received

Communicated with TAMU, State Comptroller and SAO to resolve questions about this new note disclosure


Note 24 - Disaggregation of Receivables System-wide, the total Other Receivables was less than 5%

of the total current receivables. Since the total exceeded $10M, we were asked to provide details.$ , p

Other Receivables AmountGrants and Contracts Receivable 2,546,671.08

State Receivables 4,752,466.40

Departmental Receivables 1,231,310.75

Deferred Compensation Plans 506,199.88p 99

Other 2,761,116.46

Allowance for Doubtful Accounts (193,243.43)

Total Other Receivables 11 604 530 14Total Other Receivables 11,604,530.14

CAFR Adjustments

During CAFR preparation, adjustments were made to our consolidated financial statements Investments

Futures contract reclassified from Derivatives to Investment Futures contract reclassified from Derivatives to Investment Trade Payable

Commodity hedge contract loss moved from realized loss to utility expenseutility expense

Realized gains/losses moved from Net Increase(Decrease) in Fair Value to Investment Income

Interfund payable did not equal interfund receivable Federal pass through adjustment required to balance SEFA Adjustment entry made to balance with CANSS Adjustment entry made to balance with CANSS

Federal Schedule

Activity with Research Foundation and State yAgencies outside of TAMUS Problems balance with activity reported by Texas Southern

S i S ll h d Starting next year, State Comptroller has requested we provide a schedule of Research Foundation’s activity with non-TAMUS state agencies

SAO audit of TAMUT Student Financial Aid is recognized on a cash basis because of

th l t it i th t t b ifi d b f th t d t i the last criteria that must be verified before the student is entitled to the funds

Historically we have recorded accruals for the Fall, need to analyze

Questions

15 Minute Break

AFR Software Update

Tracy CrowleySenior Manager Financial ReportingSenior Manager, Financial Reporting


Exploring Options

It doesn’t matter how many resources you haveIt doesn t matter how many resources you have.If you don’t know how to use them, they will never be enough.

Business Objects Option

Workgroup analyzed possibility of using Business Objects to generate financial reports

Some schedules will be challenging to buildh d l h h h l Schedule Three, Cash & Cash Equivalents

Develop rule-based cash allocation process Could require all members to convert to using a bank for their q g

CCP balance (instead of GL) N-2, Capital Assets schedule built using GL accounts N 21 distinguish Pledged from Non Pledged Revenue N-21, distinguish Pledged from Non-Pledged Revenue IV-4, Service Department Elimination

Amounts prorated by Natural Classification

Business Objects Option, cont’d.

Manual entries Very few entries for Members, still needed for consolidation

entries Would require creating a new transaction ledger (either a Would require creating a new transaction ledger (either a

new FAMIS screen or web-based system) to post these entries to capture them in the data warehouse

PY b l PY balances Currently these balances are queried from PY report Potential for problems will require careful review Potential for problems, will require careful review

Business Objects OptionRisks and LimitationsRisks and Limitations

Frequency and timeliness of data feeds to data warehouse Midday data feeds could be added to the daily schedule

during AFR seasonduring AFR season

Data Validation Verify reports against FAMISy p g Reports do not flow to each other, will require careful

review of Exhibits and supporting Schedules

P bli hi t Publishing reports Reports will require formatting to meet publication

standards

Business Objects Valuable Tool

Excellent Research Tool Use reports to drill down to details for amounts presented

on AFR module report Analyze object code/account control usage Analyze object code/account control usage Customized report can be created and run very quickly Users can share reports with each otherp Reports can be scheduled Valuable reconciliation tool

Other Options

Keeping our minds open about the future Started looking at software designed specifically for

financial reporting Standardized reports that we can customize to capture our dataStandardized reports that we can customize to capture our data Features that allow for simple elimination entries

ChallengesT i i i d ill k i Transition period will take time

Cash Reporting difficult Service Department Elimination

Accounting system could change Need to be prepared and know what our options are if

accounting system changesaccounting system changes

AFR Module Changes

Changes to AFR Module Reports in FY14 Remove sub-total “Total Sales of Other Goods & Services”

from Operating Revenues Section Move Realized Gain/Loss from Net Increase/Decrease in Move Realized Gain/Loss from Net Increase/Decrease in

Fair Value to Investment Income Since this was a CAFR adjustment, PY column will be adjusted

O IV F d d t il ill i t di ti i h li d On IV-Fund, detail rows will remain to distinguish realized gain/loss from interest/dividend income – summarized on Investment Income row for single column Ex IV

Add PY l t C h S h d l Th Add PY column to Cash Schedule Three Review significant fluxes, Reimb. Due from State Treasury This was an issue on several point logs in Fy13

AFR Module Changes, cont’d.

Add new supporting schedule for N-2id d il f f b S O h Provide details for transfers by type – Intra-System vs. Other

Agencies, provide detail by row (buildings, furniture, etc) N-2-FN provides totals for Intra-System vs. Other, but no

d il b detail by asset type Important to verify these transfers to avoid problems with

CANSS, and transfer confirmations Detail will assist us in preparing consolidated summary of

transfers to SPA

Eliminating Service Department ActivityActivity

Why do we keep talking about it?FY 2013 Service Department Activity

Number of Accounts

Operating Revenue

OperatingExpenses

System-wide, significant Accounts Revenue Expenses

Over 900 $517.8M $501.6M

Self -Insured Plans $220M $233.6M

significant activity flows through these accounts

As we explore other financial reporting tools, the way we currently eliminate this activity is an obstacle

Plansaccounts

we currently eliminate this activity is an obstacle Caused problems with reconciling expenses by function for

IDC proposal

There is a need for a better, more accurate, solution

Proposed New Plan

Analyze total Revenues and Expenses by Function New Business Objects report created to group accounts by

function

Eliminate Expenses by Natural Classification Eliminate Expenses by Natural Classification Create template with formulas to allocate expenses Post journal entries to eliminate revenues and expensesj p

Change AFR Module Update schedules to include operating expenses for Service

Department accounts Review existing Service Department schedule IV-4,

determine changes needed to analyze by function instead of g y yAFR fund group

Sample Business Objects Report

Operating Revenues Institutional Support Operation & Maint Of Plant Sum:

Net Other Sales of Goods and Services 1,856,985.64 791,433.61 2,648,419.25

Oth O ti R 136 973 78 0 00 136 973 78

Service Center by Function/Natural Classification - Sample University

Other Operating Revenue 136,973.78 0.00 136,973.78

Sum: 1,993,959.42 791,433.61 2,785,393.03

Operating Expenses Institutional Support Operation & Maint Of Plant Sum:

Cost of Goods Sold 213,329.23 213,329.23

Salaries & Wages 697,781.29 65,610.36 763,391.65

Payroll Related Costs 213,539.42 9,578.41 223,117.83

Professional Fees & Services 45,712.50 460.80 46,173.30

Travel 818.62 818.62

Materials & Supplies 131,456.34 602,531.73 733,988.07

Communications & Utilities 178,240.94 609.36 178,850.30

Repairs & Maintenance 169,971.85 294,841.63 464,813.48

Rentals & Leases 261,568.43 261,568.43

Printing & Reproduction 2,230.56 2,230.56

Interest 86.75 86.75

Scholarships 3,437.66 3,437.66

Other Operating Expense 22,377.77 17,878.04 40,255.81

Sum: 1,937,026.95 995,034.74 2,932,061.69

Sample AllocationInstitutional Support - Profitpp

Subcode Operating Revenues Institutional Support Elimination Net

0608 Net Other Sales of Goods and Services 1,856,985.64 1,803,964.11 53,021.53

Illustrate Elimination for Institutional Support Function

0608 Net Other Sales of Goods and Services 1,856,985.64 1,803,964.11 53,021.53

0728 Other Operating Revenue 136,973.78 133,062.84 3,910.94Sum: 1,993,959.42 1,937,026.95 56,932.47

Subcode Operating Expenses Institutional Support

6901 Cost of Goods Sold 213,329.23 213,329.23 0.00

1110 Salaries & Wages 697,781.29 697,781.29 0.00

1920 Payroll Related Costs 213,539.42 213,539.42 0.00

5453 Professional Fees & Services 45,712.50 45,712.50 0.00

3030 Travel 818.62 818.62 0.00

4010 Materials & Supplies 131,456.34 131,456.34 0.00

5010 Communications & Utilities 178,240.94 178,240.94 0.00

5512 Repairs & Maintenance 169,971.85 169,971.85 0.00

5840 Rentals & Leases 261,568.43 261,568.43 0.00

5615 Printing & Reproduction 2,230.56 2,230.56 0.00

6335 Other Operating Expense 22,377.77 22,377.77 0.00Sum: 1,937,026.95 1,937,026.95 0.00, ,

Net Profit (Loss) 56,932.47 0.00 56,932.47

Sample AllocationOperation & Maintenance of Plant - Loss

Illustrate Elimination for O&M Function

Subcode Operating Revenues Operation & Maint Of Plant Elimination Net

0608 Net Other Sales of Goods and Services 791,433.61 791,433.61 0.00Sum: 791,433.61 791,433.61 0.00

Operating Expenses Operation & Maint Of Plant

1110 Salaries & Wages 65 610 36 52 185 36 13 425 001110 Salaries & Wages 65,610.36 52,185.36 13,425.00

1920 Payroll Related Costs 9,578.41 7,618.50 1,959.91

5453 Professional Fees & Services 460.80 366.51 94.29

4010 Materials & Supplies 602,531.73 479,243.43 123,288.30

5010 Communications & Utilities 609.36 484.67 124.69

5512 Repairs & Maintenance 294,841.63 234,511.99 60,329.64

6230 Interest 86.75 69.00 17.75

5215 Scholarships 3,437.66 2,734.26 703.40

6335 Other Operating Expense 17,878.04 14,219.89 3,658.15Sum: 995,034.74 791,433.61 203,601.13

Net Profit (Loss) (203,601.13) - (203,601.13)

Proposed Journal Entries

Set of elimination entries for each functionh l ld b d d l In this example, entries would be needed to eliminate

Institutional Support and O&M of Plant activity Institutional Support examplepp p

Eliminate Cost of Goods Sold, $213,329.23 Debit Revenue 279999-0608 Credit Expense 279999 6901 Credit Expense 279999-6901

Continue with entries to eliminate $1,937,026.95 rev/exp FAMIS Compound Journal Entry Screen 25 useful for entries

ability to enter multiple debits and credits on one screen

Year-End Adjustment AccountO f h f ti AFR F d G (d ’t One for each function, use AFR Fund Group 21-29 (doesn’t matter which one)

Potential Impact toFinancial StatementsFinancial Statements

Expense categories will change for the net expenses p g g pfrom service department accounts Shift from AFR fund group categories to Natural Classification

IV-4 Schedule After the entries, will no longer show total revenues and

expensesexpenses Still useful to review ending balances, non-operating activity Change to single column schedule for all service departments

New Allocation Workpaper Submit with AFR to document elimination entries

T l ld l k i il h l ll i Template would look similar to these sample allocations

Assignment for Members

Intention of proposed plan is to improve reporting to p p p p p gmatch the theory

Each member will be asked to review their service center activity and provide feedback on this change

Does this solution makes sense for your activity? Review Business Objects query for your campus code

Report saved in TAMUS Shared, AFR Review Queries folder “NEW Service Center Elimination Worksheet_FY14”_ 4

Run for FY13 and compare to IV-4 schedule Concerns about the proposed plan?

N FAMIS thi k b t h th i t i ld k Non-FAMIS users, think about how their entries would work

Questions?

Return at 1:00

Financial Reporting in 2014

Teresa Bass, CPAComptroller Comptroller


Overview of Potential Changes

GASB Statements TASSCUBO Accounting Principles Committee NACUBO FunctionNACUBO Function Cash Flow Template Improvements New FAMIS Screen 59 New FAMIS Screen 59 Hazlewood Funding Outsourcing Arrangements AFR Impacts Outsourcing Arrangements – AFR Impacts Net Position

GASB 65 Effective FY14

Items Previously Reported as Assets and Liabilitiesy p Implemented GASB 63 in FY13, which defined new rows for

Deferred Outflows and Inflows of Resources and renamed Net Assets to Net PositionAssets to Net Position

GASB 65 reclassifies some items previously reported as assets and liabilities to deferred outflows and inflows of resources, or

i d recognized as revenue or expense Previously, only derivatives (GASB 53) and SCA’s (GASB 60) were

included as deferred outflows and inflows of resources States that use of the term “deferred” is limited to items

reported as deferred outflows or inflows, and should not be used in connection with any other title

GASB 65 Examples

Specific transaction types, limited impact Sale-Leaseback transactions - gain or loss on sale

accompanied by a leaseback of the property recorded as deferred inflow/outflow and recognized over life of the / glease

Debt issuance costs immediately expensed instead of amortized over time (UT System expensed their amortized over time (UT System expensed their unamortized portion, no impact to TAMUS)

Non-Exchange transactions subject to time requirements Funds received in advance that cannot be spent until a future

period No impact to unearned revenue, unless the funds were not

spent because of an imposed time requirement


Accounting and Financial Reporting for g p gNonexchange Financial Guarantees Requires a government that extends a financial guarantee to

recognize a liability when qualitative factors indicate that it is recognize a liability when qualitative factors indicate that it is more likely than not that the government will actually be required to make a payment as a result of the guarantee

tagreement Disclosure requirements


Accounting and Financial Reporting for Pensions Requires governments to recognize long-term obligation for

pension benefits State Comptroller’s Office could apply at the agency level and State Comptroller s Office could apply at the agency level and

require all agencies to report their share of the TRS obligation If this occurs, will we be allowed to report these liabilities at the

System Office Level orSystem Office Level or Will this be a requirement for each member

GASB 60 Service ConcessionArrangements (SCA)Arrangements (SCA) Very narrow in scope — to be an SCA, all criteria in GASB 60,

h 4 t b t paragraph 4 must be met

1. Transferor conveys to operator the right and related obligation to provide public services through the use and operation of a capital asset (a "facility") in exchange for significant consideration (such as an up-front payment, installment payments, a new facility or improvements to an existing facility)Operator collects and is compensated by fees from third parties2. Operator collects and is compensated by fees from third parties

3. Transferor determines or has the ability to modify or approve Services the operator is required to provide To whom the operator is required to provide the services To whom the operator is required to provide the services Prices or rates that can be charged for the services

4. Transferor is entitled to significant residual interest in the service utility of the facility at the end of the arrangement the facility at the end of the arrangement

GASB 60 SCAGASB 60 SCA

Analyze contracts carefullyAnalyze contracts carefully New agreements with outside parties to construct dorms for

students

Outsourcing Impact on Financial Statements Object Codes Object Codes Impact on HUB

System Office analyzing coding possibilities

TASSCUBO Accounting Principles CommitteeCommittee

How often statements issued by other institutionsy Software packages-Excel, Oracle, Mircosoft

Publisher, internally developed software Service Center eliminations Net Position analysis Restricted vs. UnRestricted

Texas Tech-HEF SAO recommend Restricted A&M System Office/TAMU-audit of Account Setups A&M System Office/TAMU audit of Account Setups

U of H-Negative Net Position balances had to be reclassed to Unrestricted

TASSCUBO Accounting Principles Committee contCommittee, cont.

Service Centers-workgroup was recommended for g pthis topic Functions

M i i i ill i I i i l S Most institutions still using Institutional Support U of H and SFA using Research and O&M

How do institutions eliminate Length of time spent on elmination entries

Fixed Tuition Plans-requires no additional accounting entries, burden on provost

Future Meetings-ask for a representative from each i tit tiinstitution

NACUBO Accounting Principles CommitteeCommittee

Blank Slate Project-New Statements were preparedj p p We went over these new statements, very different NACUBO Accounting Principles Committee-Met with

GASB/FASB met with mixed reviewsGASB/FASB, met with mixed reviews

New Functions-Better Comparability Education Education Research Auxiliaries Independent Operations Medical Centers & Hospital Public Service Public Service

Cash Flow Template Improvements

Updating flux workpaper to correct formula problems

Reduce the number of rows if not applicable More adjustments needed by the members Service Center elimination entry Agency Fund activity Non-cash activity

Consider increasing dollar threshold to $100,000 (increase from $25,000)

Keep as 20%

New FAMIS Screen 059

Provides reporting attributes for SL accounts, and support accounts, included in the THECB or NSF HERD Survey of research expenses Many accounts are NOT actual sponsored projects but are included Many accounts are NOT actual sponsored projects, but are included

in research reports, such as state appropriations allocated for a research program or initiative, indirect cost funds spent for “research” purposes, faculty start-up packages, or research giftsp p , y p p g , g

CFDA Codes – federal funds paid to an institution (FEMA reimbursements) not considered part of a sponsored project

When new attributes are added to data warehouse for Business When new attributes are added to data warehouse for Business Objects reports, will have ability to associate the account/support account with a sponsor and reporting codes

Screen 59 Sample

Benefits of Screen 059

Screen 059 allows you to assign reporting attributes to accounts and support accounts that are not set up as an SPR project, such as State Appropriated accounts, Designated accounts, or Appropriated accounts, Designated accounts, or gift accounts for researcho Sponsor

R i d ( l i SPR)o Reporting codes (currently on screen 122 in SPR)o CFDA (if applicable)

Sample screen shows cost share support account Sample screen shows cost share support account for an NSF project, notice the o Sponsor = State of Texas – State Appropriations

R ti d i th j t ti do Reporting codes mirror the project reporting codes

Benefits of Screen 059, cont’d

Now that we have the ability to assign the y gNACUBO function at the support account level, this has allowed us to capture cost share support

t h account research expenses There has been no way previously to associate a

support account with an SPR project because you support account with an SPR project because you can only match the SPR project to the SL account level, and the attributes were only in SPR, y

Caution – Do not use screens 009 (or 059) if the SL account is already linked to a Sponsored Project number in SPR

SPR Sponsors

SPR Sponsors to use on NON-sponsored project accountsa) State appropriated accounts – Use SPR sponsor 0000794b) Designated accounts for indirect cost returns/incentives – Use SPR

sponsor 0005175p 5 75c) University authorized tuition accounts – Use SPR sponsor 0002883d) Available University Fund accounts – Use SPR sponsor 0000669

) Designated Funds Sales & Services Use SPR sponsor 0004651e) Designated Funds – Sales & Services – Use SPR sponsor 0004651f) Student Fees – Use SPR Sponsor 0007398g) Residual Funds from Grants & Contracts – Use SPR sponsor

0004597h) Gifts – Texas A&M Foundation – Use SPR sponsor 0000822i) Gifts – From specific private sponsors or corporations – Use SPR

sponsor in SPR Sponsor table or request new sponsor.

HB 1025 Hazlewood Supplement

House Bill 1025 provides $30 million to Texas public institutions as a means of reimbursing tuition revenue lost through the Hazlewood and the Hazlewood Legacy Actsthe Hazlewood Legacy Acts Hazlewood Act gives tuition exemptions to honorably

discharged military veterans who attend collegeHazlewood Legacy Act provides the same benefit to the Hazlewood Legacy Act provides the same benefit to the spouses and children of those who have served or are currently serving in the military

All ti b d h i tit ti ’ Allocations are based on each institution’s respective share of the aggregate cost of the exemption for students under the Legacy Program p g y g

TAMUS Hazlewood Impact

Of the $30 million appropriated by HB 1025, the A&M System received over $6 million for AY14

Institution NameHazlewood Supplement

Prairie View A&M University $ 335,995 yTarleton State University 338,462 Texas A&M International University 118,743 Texas A&M University 3,612,034 Texas A&M University at Galveston 195 653Texas A&M University at Galveston 195,653 Texas A&M University‐Central Texas 23,598 Texas A&M University‐Commerce 267,877 Texas A&M University‐Corpus Christi 804,900 Texas A&M University‐Kingsville 463,405 Texas A&M University‐San Antonio 78,080 Texas A&M University‐ Texarkana 20,275 Texas A&M Health Science Center 99,264 ,

$ 6,358,286

Hazlewood Accounting Treatment

Record as a State Grant Pass-Through from THECBg USAS revenue code 3842; FAMIS code 0257

UB authority for both THECB and the institutions Institutions can use these funds to reimburse FY14 or FY15

Hazelwood Exemptions at their discretion

Spending restrictions Spending restrictions Per LBB, these funds are “for the purpose of reimbursing costs

associated with the Hazlewood Legacy Program” Article in Sam Houston University’s newspaper states “the

money received this year will be used to pay salaries and replace funds for some one-time programs and projects”p p g p j

UT recorded in E&G due to potential impact to proportionality

Outsourcing Arrangements-AFR ImpactsOutsourcing Arrangements AFR Impacts

Some members were struggling with estimating an gg g gaccrual either at the overall campus level or the department level

Estimates were posted in FY 2013 Analyze and compare to the invoices Any additional year end concerns?

Net Position

Board of Regents Focusg Remaining Uncommitted Amount and # of Months

Less Unrealized Investment Earnings, internal commitments and other legal obligationsother legal obligations

Average for all Members 3.8 Months of Reserves Explanations were required when there were variances

Comparability to other Texas Universities Others are recording debt payments in the Restricted for Debt

Service line item vs the Unrestricted Retirement of Service line item vs. the Unrestricted-Retirement of Indebtedness row

We are researching what the industry is recording

Questions?

Net Position Categories

Tracy CrowleyTracy CrowleySenior Manager of Financial Reporting


Net Position per Balance Sheet

Exhibit IIIThe Texas A&M University SystemThe Texas A&M University SystemCombined Statement Of Net PositionFor The Year Ended August 31, 2013

Current Year Prior YearNet Position Net Investment In Capital Assets 1,307,774,114.02$ 1,284,223,421.32$ Restricted for

i l j Capital Projects 40,433,189.27 84,372,806.48 Education 281,666,779.08 263,085,114.96 Endowment and Permanent Funds Nonexpendable 420,073,627.66 404,634,119.29

E d bl 170 847 122 44 133 894 137 14 Expendable 170,847,122.44 133,894,137.14 Unrestricted 2,351,859,958.84 2,062,776,988.65

Total Net Position 4,572,654,791.31$ 4,232,986,587.84$

Restricted Net Position

Net Investment in Capital Assetsl f d d Capital assets, net of depreciation/amortization and

outstanding debt related to the purchase or improvement of those assets

Consider deferred outflows related to acquisition of assets

Restricted for Debt Service

Most State of Texas universities (excluding A&M System) are reporting amounts reserved to pay outstanding debt

Restrictions externally imposed by creditors Capital Projects

Unspent bond proceeds (net of related debt) Unspent bond proceeds (net of related debt) Restricted funds reserved to fund capital projects

Restricted Net Position, cont’d.

Restricted for, cont’d. Education Education

Restricted fund group (excluding Capital Projects) Federal E&G Funds (AgriLife)

Endowment and Permanent Funds Nonexpendable and Expendable Analyzing what belongs in these two categories Analyzing what belongs in these two categories State Comptroller says the balance of unrealized fair value

for Restricted True and Term Endowments belongs in ExpendableExpendable

Historically, we have placed the True Endowment fair value adjustment in NonExpendable

Nonexpendable is only appropriate for the the corpus of Nonexpendable is only appropriate for the the corpus of donor restricted True Endowments

True Endowment Corpus

We will focus defining what is included in the gcorpus

Corpus of a donor-restricted True Endowment includes donor gifts Fair value of fund when received Plus subsequent gifts Plus subsequent gifts Plus other addition specified by the donor

Other components of Endowment balance not Other components of Endowment balance not considered part of the corpus Reinvested realized gains/losses (Appreciation Reserve) Unrealized gains/losses (Fair Value Adjustment)

Net Position for Endowments

Balance Sheet NetPosition

AFRFund Group/Acct

What’s included?

Control

Restricted for Endowment and Permanent Funds,Non-Expendable

60 – 63 •True and Term Endowments, excluding the related appreciation reserve and fair value adjustment. Non Expendable adjustment.

Restricted for Endowment and Permanent Funds, Expendable

64, 65 •Restricted Quasi-Endowments (funds with external restrictions internally designated as an endowment)

(2796 – Appr Rsv Fund Balance-Expendable)

2796

NEW

• True Endowment Appreciation Reserve

• True Endowment Unrealized Gain/LossEntry

Unrestricted (III-1, Funds Functioning as Endowments)

66, 67 Quasi-endowments with no external restrictions, plus the appreciation reserve and unrealized gain/loss related to these accounts.as Endowments) unrealized gain/loss related to these accounts.

Example 1

True Endowment Donor gives $100,000 to establish an endowment. As of

08/31, the market value is $110,000.

Net Position Category AmountRestricted – NonExpendable $100,000

R t i t d E d bl $Restricted – Expendable $10,000

Unrestricted (III-1, Funds Functioning as Endowments)

$0Endowments)

Example 2

Quasi-Endowment Board approves establishing a $100,000 endowment using

unrestricted institutional funds . As of 08/31, market value is $110,000.$ ,

Net Position Category AmountR i d N E d bl $Restricted – NonExpendable $0

Restricted – Expendable $0

Unrestricted d $110 000(III-1, Funds Functioning as

Endowments)

$110,000

Example 3

Quasi-Endowment established with Restricted funds Board approves establishing a $100,000 endowment, using

funds received from a donor that are restricted to provide funds received from a donor that are restricted to provide scholarships. As of 08/31, market value is $110,000.

Net Position Category AmountNet Position Category AmountRestricted – NonExpendable $0

Restricted – Expendable $110,000

dUnrestricted (III-1, Funds Functioning as Endowments)

$0

Analyze Net Position Closely

With Endowments, usually more of the focus is on earnings, distribution, and performance How to accurately budget to fund scholarship awards? Consistent quarterly payout helps with this Consistent quarterly payout helps with this

Historically have not focused as heavily on the Net Position categoryPosition category

Start looking closer at these categories and how they compare to quarterly endowment reportsy p q y p

Illustration 1 - EndowmentNet Position SampleNet Position Sample

Amounts Reported i N t P iti

AmountRestricted for

in Net Position should match Quarterly

Expendable 10,822,223.09

NonExpendable 49,050,273.46

Endowment Report

AFR ld b

UnrestrictedFunctioning as Endowment 369,774.24

AFR could be slightly higher for new gifts not

Total 60,242,270.79

E d M k V lg

invested yet, or if other assets are included

Endowment Market ValuePer System's Report 60,216,147.89

Difference 26,122.90 included , 9

Illustration 2 - EndowmentNet Position SampleNet Position Sample

Agency funds are

AmountRestricted for

Expendable 10,009,927.36g yexcluded from Net Position, valid difference between

NonExpendable 43,220,680.43

UnrestrictedFunctioning as difference between

financial statements and endowment

t

Endowment -

Total 53,230,607.79

reports Endowment Market ValuePer System's Report 66,391,141.62

Endowments in Agency Funds 13,160,533.83

Net Total 53,230,607.79

Difference -

Workgroup Needed

Seeking Workgroup Volunteersl f d Analyze AFR fund groups 60-67

Significance of General Purpose and Student Aid Distinguish which Quasi-Endowments are Restrictedg Q

Discuss how endowments should be reflected in the Net Position, distinguish betw. Expendable and NonExpendableDiscuss methodology for allocating the Appreciation Discuss methodology for allocating the Appreciation Reserve Improvement needed, older endowments should be weighted

h i i th ll tiheavier in the allocation

Member Assignment Compare the financial statement net position rows for Compare the financial statement net position rows for

endowments and to 4th quarter endowment reports

III-1 Unrestricted Net PositionR d Reserved

Schedule III-1

For the Year Ended August 31 2013Combined Unrestricted Net Position

TOTAL PRIOR YEAR

Reserved for Encumbrances 96,812,133.01$ 101,903,570.98$

For the Year Ended August 31, 2013

Capital Projects 177,493,238.42 147,658,949.60 Retirement of Indebtedness 181,781,142.25 148,376,005.45 Receivables [Net of Unearned Revenue] 893,428,483.47 906,497,389.06 Inventories 24,441,070.60 24,671,258.31

Prepaid Expenses 43 576 443 78 40 001 912 71 Prepaid Expenses 43,576,443.78 40,001,912.71 Deposits 821,160.59 734,220.36 Self-Insured Plans 50,890,557.41 59,555,634.73 Advanced Technology/Research Programs 128,567.94 961,744.21 TPEG Reserves 8,560,496.71 8,727,332.52 Designated Tuition Set Aside Reserves 19,999,927.12 23,766,067.56 Available University Fund 24,687,127.66 24,204,046.34 Higher Education Fund 18,619,157.70 19,475,390.96 Texas Forest Service-Special Reserves 84,323,447.57 67,625,891.99

Prairie View A&M University-OCR & CJCP 7 377 986 30 7 078 799 51 Prairie View A&M University OCR & CJCP 7,377,986.30 7,078,799.51 State Funds and Special Projects 11,580,068.35 9,400,356.09

III-1 Reserved

Reserved for Encumbrances

FAMIS encumbrance account controls 9610, 9620, etc. Capital Projects Capital Projects

Contracts entered into for construction projects, not yet encumbered

R ti t f I d bt d Retirement of Indebtedness Historically, next year’s debt service transfer to System, net of

appropriated tuition revenue bond debt service funding Considering reclassifying these balances to Restricted

Receivables (Net of Unearned Revenue) Receivable balances, excluding Due from Other Members and Receivable balances, excluding Due from Other Members and

Loan Receivable

III-1 Reserved, cont’d.

Inventories - both consumable and merchandise Prepaid Expenses - goods & services paid in advance Deposits – assets held by others, such as a utility deposit Self Insured Plans Self Insured Plans

Primarily System Offices reserves for Health/Dental plans Members may report UCI balances here (not much reserves)

d d h l h Advanced Technology/Research Programs Program is ending, may not have any balances next year

TPEG and Designated Tuition Set Aside ReservesG a d es g ated u t o Set s de ese es Set asides to be used for grants to students, not for general

operations TPEG should match TPEG Worksheet TPEG should match TPEG Worksheet

III-1 Reserved, cont’d.

Available University Fund (AUF)i i d b l ( A SC A d Remaining Fund 0047 balance (TAMU, HSC, PVAMU and

System Office only) Higher Education Fund, unencumbered HEF balances Texas A&M Forest Service-Special Reserve Prairie View – OCR & CJCP State Funds and Special Projects State Funds and Special Projects

Intended for specific expenses, not for general operations

III-1 Unrestricted Net PositionUnreservedUnreserved

Schedule III-1Combined Unrestricted Net Position

Unreserved Allocated

For the Year Ended August 31, 2013

Allocated for Operations 363,217,470.92 324,540,257.25 Funds Functioning As Endowments 168,675,850.33 146,649,818.10 Research/Sponsored Project Commitments 18,025,251.64 22,499,698.42 Endowment Commitment 7,944,865.89 1,630,000.00 Faculty/Researcher/Staff 86,183,267.18 92,073,001.35 Capital Plan and Major Purchases 108,533,094.32 96,804,355.70 Maintenance and Repair 28,921,886.60 11,677,743.37 Other 34,365,804.62 25,991,383.10 , , , , Unallocated (108,528,541.54) (249,727,839.02)

Total Unrestricted 2,351,859,958.84$ 2,062,776,988.65$

III-1 Unreserved

Unreserved Allocated

Allocated for Operations Used to cover budget costs greater than estimated revenue in Used to cover budget costs greater than estimated revenue in

upcoming year Funds Functioning as Endowments Unrestricted Quasi Endowments including related Unrestricted Quasi-Endowments, including related

Appreciation Reserve and fair value adjustment Research/Sponsored Project Commitments

M t hi f d i t ll itt d t f d Matching funds internally committed as part of a sponsored project grant

Endowment Commitment

III-1 Unreserved, cont’d.

Allocated (cont’d) Faculty/Researcher/Staff Faculty/Researcher/Staff Internal commitment to meet faculty reinvestment goals

Capital Plan and Major PurchasesC it l j t d f d t id f j h Capital projects and funds set aside for major purchases

Maintenance and Repair Other

UnAllocated Remaining fund balance after reserved and allocated balances Allocations of Unreserved fund balances should not result in a Allocations of Unreserved fund balances should not result in a

deficit Unallocated fund balance Allocated for Operations is combined with UnAllocated for the

purposes of analyzing how many months reserves could purposes of analyzing how many months reserves could support operations

Focus on Net Position

Net position is being focused on by management, SAO, and the State Comptroller’s Office

Review accounts for accurate fund groups, t i t d t i t drestricted vs. unrestricted

Workgroup will be meeting to further define how endowments should be reportedendowments should be reported

Allocations are more user defined, methodology will vary will vary Document allocation amounts when possible Allocations for planned purchases not under contract, and

not yet encumbered

Questions?

15 Minute Break

h lCash Flow Statement AdjustmentsAdjustments

Teresa Bass, CPAComptroller

Texas A&M System OfficeTexas A&M System Office

Cash Reporting

Cash Statement Theory

Convert from Accrual Basis to Cash Basis Unique row titles Prepared by NACUBO Fund Groupp y p Issued Statement in the Single column Must tie to Cash System’s Template Correlates rows for most common

use of Balance Sheet & Operating Statement rows Members must adjust for their uniqueness Dark blue rows used for these adjustments

Why so complicated?

Fiscal Office Accountants are the Expertsp Departments do not operate based upon these unique GAAP

requirements Prepared/Analyzed Infrequently Annually Prepared/Analyzed Infrequently-Annually

FAMIS processing of payroll-posts to E&G column Must be distributed manually by the member to the correct Must be distributed manually by the member to the correct

Fund Group In hindsight, BPP/FAMIS could have posted to the Fund

Group but we just didn’t build it that way Group, but we just didn t build it that way S&W payable & Benefit payable must be accurate by Fund

Group to ensure Cash Flow line items match

Why so complicated?, cont.

Each section the preparer must understand how each p psection is posted on the Balance Sheet & Operating Statement

d f d d d To determine if an adjustment is needed Mostly allocate balance sheet items to more appropriate row Occasionally allocate operating statement to more appropriate Occasionally allocate operating statement to more appropriate

row

All AFR entries have to be posted before this statement can be accurate Member may begin working on it earlier, but must be verified

to the last version of the statementsto the last version of the statements

Proceeds Received from Customers:Net Sales of Goods & Services 10 842 972 46 10 842 972 46Net Sales of Goods & Services 10,842,972.46 10,842,972.46 Net Professional Fees ‐ ‐

10,842,972.46 Adjustments: PY CY DifferenceA t R i blAccounts Receivable: Customer A/R 1300 2,688,437.02 3,116,430.75 427,993.73 Allowance for Uncollectible Rec 1396 (37,000.83) (46,519.06) (9,518.23) Allowance for Uncoll. Rec-Other 1399 - - - Less: Receivables for Sponsored Programs (enter as -###) - ak Less: Receivables for Benefits Paid Directly by the State ( 1395 - an

2,651,436.19 3,069,911.69 418,475.50 (418,475.50) Due From Other MembersDue From Other Members Due From Members 1801-1826 392,924.08 1,430,288.72 1,037,364.64 Less: Due From Members for Sponsored Grants & Contra1801-1826 (30,877.03) (380,288.67) (349,411.64) e Less: Due From Members for Transfers of Debt Proceeds1801-1826 (362,047.05) (1,050,000.05) (687,953.00) gLess D e From Members for NonMandator Constr ction1801 1826 bb Less: Due From Members for NonMandatory Construction1801-1826 - bb

‐ ‐ (0.00) 0.00 Other Adjustments:

‐

Total Proceeds Received from Custome 10,842,972.46 10,424,496.96

Proceeds Received from Customers:Net Sales of Goods & Services 1,245,256.68 1,245,256.68 Net Professional Fees ‐ ‐Net Professional Fees ‐ ‐

1,245,256.68 Adjustments: PY CY DifferenceAccounts Receivable: Customer A/R 1300 7,156,972.49 8,306,776.91 1,149,804.42 Allowance for Uncollectible Rec 1396 (110,250.91) (126,132.35) (15,881.44) Allowance for Uncoll. Rec-Other 1399 - - - Less: Receivables for Sponsored Programs (enter as -###) (7,046,721.58) (8,180,644.56) (1,133,922.98) ak Less: Receivables for Benefits Paid Directly by the State (enter as -###) 1395 - an

(0 00) 0 00- - (0.00) 0.00

Due From Other Members Due From Members 1801-1826 226,843.92 1,753,845.39 1,527,001.47

Less: Due From Members for Sponsored Grants & Contracts (enter as -#1801-1826 (226,843.92) (1,753,845.39) (1,527,001.47) e Less: Due From Members for Sponsored Grants & Contracts (enter as #1801 1826 (226,843.92) (1,753,845.39) (1,527,001.47) e Less: Due From Members for NonMandatory Construction Proceeds Tfs 1801-1826 - bb

‐ ‐ ‐ ‐ Due From Other Agencies Due from Other State Agencies 1800 675,683.82 682,383.65 6,699.83 Less: Sponsored Project-Related Due From Other State Agencies (enter 1800 (675,683.82) (682,383.65) (6,699.83) i

- - - ‐ Other Adjustments:

‐

Total Proceeds Received from Customers 1,245,256.68 1,245,256.68

Texas A&M University Reclassifying entries within worksheet - enter in blank cells and it pulls to the appropriate offset

Statement of Cash Flows-Restricted Manual adjustments - Explanation required

FY 2013FY 2013 Ties to Summary by Fund worksheetPulled to Reconciliation of Net Optg Rev/Exp from corresponding Asset/Liab/Other adjustmentsFour section subtotals tie to Net Increase/Decrease in Cash

pull from IV-FUNDpull from IV-3pull from IV 3

pull from IV-3-a FBMR204, PY FBMR204, CY Other Cash FlowSRECNA SNA Adjustments Amounts

CASH FLOWS FROM OPERATING ACTIVITY:

Proceeds Received from Tuition & Fees:

Net Student Tuition & Fees:Tuition ‐ ‐

Unearned Revenues 2750 53,051,411.99 47,757,914.66 (5,293,497.33) Less: Unearned Revenues from Sponsored Grants/Contracts (enter as -###) 2750 (44,957,478.71) (38,727,115.85) 6,230,362.86 b Less: Unearned Revenues for Gifts-GASB 33 (enter as -###) 2750 - c Less: Unearned Revenues from Other Sources (enter as -###) 2750 - dess U ea ed e e ues o Ot e Sou ces (e te as ###) d

8,093,933.28 9,030,798.81 936,865.53 936,865.53

Other Adjustments: Other………. ‐

Total Proceeds Received from Tuition & Fees ‐ 936,865.53

Payments to Employees for Salaries:

Payments to Employees (Salaries & Wages):Salaries & Wages (110,777,190.52) (110,777,190.52)

(110,777,190.52)(110,777,190.52) Adjustments: PY CY DifferenceOther Current Assets:

Payroll Suspense 1601 - - ‐ Payroll Suspense 1601 Payroll Disbursements Clearing 1620 ‐ ‐ ‐

‐ ‐ ‐ ‐ Payroll Payable:Payroll Payable: Unclaimed Payroll Checks 2136 - - ‐ Accrued Payroll 2400 9,356,462.27 8,242,541.56 (1,113,920.71)

9,356,462.27 8,242,541.56 (1,113,920.71) (1,113,920.71)9,356,462.27 8,242,541.56 (1,113,920.71) (1,113,920.71) Other Adjustments:

‐

Total Payments to Employees for Salaries (110,777,190.52) (111,891,111.23)

Payments to Employees for Benefits:

Payments to Employees (Benefits):Payroll Related Costs (81,072,820.06) (81,072,820.06)

(81 072 820 06)(81,072,820.06) Adjustments: PY CY DifferencePayroll Payable:

f S 2200 Benefits Payable Sales 2200 - - ‐ Benefits Payable 2210 9,678,865.94 6,634,213.32 (3,044,652.62) In 2013, moved Deferred Comp Liability to NonOperating section Line 643 & 644

9,678,865.94 6,634,213.32 (3,044,652.62) (3,044,652.62) Employees' Compensable Leave: Current Accrued Compensable Absences Payable 2410 2,947,255.11 4,464,632.41 1,517,377.30 Non-Current Accrued Compensable Absences Payable 2415 30,109,964.31 30,828,810.03 718,845.72

33,057,219.42 35,293,442.44 2,236,223.02 2,236,223.02 Total Payments to Employees for Benefits (81,072,820.06) (81,881,249.66)

Purchase/Sale of Investments Held by System:

Net Increase (Decrease) in Fair Value -

Adjustments: PY CY DifferenceAssets Held by SAGO LT NonCurrent Restricted 1204 3 251 531 60 3 474 867 87 223 336 27Assets Held by SAGO LT-NonCurrent-Restricted 1204 3,251,531.60 3,474,867.87 223,336.27 Separate Investments by System Offices-NonCurrent-R 1205 ‐ ‐ ‐ Cash Concentration Pool-NonCurrent-Not Restricted 1206 ‐ ‐ ‐ Assets Held by SAGO LT-NonCurrent-Not Restricted 1207 ‐ ‐ ‐ Invst System Endowment Fund‐NonCurrent‐Restricted 1210 12,437,213.96 13,160,533.83 723,319.87 Endowed Faculty Scholars Fund‐NonCurrent‐Restricte 1220 ‐ ‐ ‐

15,688,745.56 16,635,401.70 946,656.14 (946,656.14)

Plus: Member Assets Held for Investment (SAGO only2801-2826 ‐ ‐ ‐ auInvestment Trade Payables 2155 ‐ ‐ ‐

‐ ‐ ‐ ‐

Other Adjustments:Adj to Payment for Other Uses 946,656.14 946,656.14

Total Purchase/Sale of Investments ‐ ‐

Purchase/Sale of Investments Held by System:

Net Increase (Decrease) in Fair Value ‐ -

Adjustments: PY CY DifferenceAssets Held by SAGO LT-NonCurrent-Restricted 1204 ‐ ‐ ‐Assets Held by SAGO LT NonCurrent Restricted 1204 Separate Investments by System Offices-NonCurrent-Restricted 1205 ‐ ‐ ‐ Cash Concentration Pool-NonCurrent-Not Restricted 1206 156,799,721.69 188,151,714.81 31,351,993.12 Assets Held by SAGO LT-NonCurrent-Not Restricted 1207 ‐ ‐ ‐ Invst System Endowment Fund‐NonCurrent‐Restricted 1210 ‐ ‐ ‐ Endowed Faculty Scholars Fund‐NonCurrent‐Restricted 1220 ‐ ‐ ‐

156,799,721.69 188,151,714.81 31,351,993.12 (31,351,993.12)

Plus: Member Assets Held for Investment (SAGO only; formula pulling from abo 2801-2826 ‐ ‐ ‐ auInvestment Trade Payables 2155 ‐ ‐ ‐

‐ ‐ ‐ ‐

Other Adjustments:‐

Total Purchase/Sale of Investments Held by System ‐ (31,351,993.12)

Designated-Non-Capital GiftsPayments to Suppliers:

(18 798 298 55)(18,798,298.55) Non-capital Gifts 24,794.20 24,794.20

‐ 24,794.20 24,794.20 24,794.20 rr

Total Payments to Suppliers (18,798,298.55) (18,567,687.75)

CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITY:

Gifts:

Gifts 369,794.20 369,794.20

Remove impact of Non-cash Gifts for NonCapital Assets (formula pullin ‐ (24,794.20) (24,794.20) (24,794.20) rr

Other Adjustments:‐

Total Proceeds from Gifts 369,794.20 345,000.00

NON-CASH TRANSACTIONS:NonMonetary Gifts, Including Capital Assets 24,794.20

Net Change in Fair Value of Investments (72 84)Net Change in Fair Value of Investments (72.84)

Gain/Loss on Sale/Disposal of Capital Assets 150,000.00 150,000.00 Refunding of Long Term DebtAmortization of Bond Premiums and DiscountsOther

Agency Funds

Adjust for actual receipts and disbursements from agency funds (HSC already doing this) Current Process

Net change in Agency Fund Balance code 3940 flows into the Net change in Agency Fund Balance code 3940 flows into the cash flow template as Payments for Other Uses

Adjustment is made to reclassify to Proceeds from Other Non-Capital Financing if the amount is positiveCapital Financing if the amount is positive

Proposed Change Each Member analyzes agency fund activity (amounts received,

id)amounts paid) Enter adjustments in the dark blue cells of the cash flow

workpaper to increase Proceeds and Payments to capture this i iactivity

Agency Fund Adjustment

Details of what is included in the adjustments to jrecord this activity Proceeds from Other Non-Capital Financing Activities

N O i R (R li d & U li d G i /L NonOperating Revenues (Realized & Unrealized Gain/Loss, Investment Income, Gifts, Other Fund Additions)

GL 9390 - Revenue Sum Ledger Payments for Other Uses

NonOperating Expenses (Investment Fees, Other Deductions) GL 9590 – Expense Sum LedgerGL 9590 Expense Sum Ledger

Agency FundAgency FundProceeds from Other Non-Capital Financing Activities:

Land Income ‐ Other Non-Operating Revenues ‐ Other Adjustments: Less: Net Decrease in Advances from Other Agencies (enter as -###) 4645 ‐ sL A ti ti f b d i ( t ###) 4491 Less: Amortization of bond premium (enter as -###) 4491 ‐ u

Agency funds cash received 48,154,035.45 48,154,035.45 Less: Proceeds from Interest and Investment Income (enter as -###) ‐ ar

Total Proceeds from Other Non-Capital Financing Activities ‐ 48,154,035.45

Agency FundPayments for Other Uses:

Other Non Operating Expenses ‐ Settlements and Claims ‐

‐

Other Liabilities Annutities Payable 2140 ‐ ‐ ‐ Assets Held in Trust 2710 ‐ ‐ ‐ Assets Held in Trust 2710 ‐ ‐ ‐

NonCurrent Assets Held in Trust 2712 15,688,745.56 16,635,401.70 946,656.14 Other Current Liabilities 2725 ‐ ‐ ‐ Other Non-Current Liabilities 2730 ‐ ‐ ‐ A F d B l 3940 601 828 18 460 018 29 (141 809 89) Agency Fund Balance 3940 601,828.18 460,018.29 (141,809.89)

Less Other Current Liabilities for operating leases (en 2725 ‐ ah Less Other NonCurrent Liabilities for operating leases 2730 ‐ ai

16,290,573.74 17,095,419.99 804,846.25 804,846.25 Other Adjustments: Less: Net Increase in Advances from Other Agencies 5645 ‐ t Less: Disbursements fm Fed Appn and other NonOptg Spon Pgms (enter as +###) ‐ x Agency funds payments (49,101,363.46) (49,101,363.46)

Total Payments for Other Uses ‐ (48,296,517.21)

Typical Adjustments Made

Ensure Transfers Match the IntraSystem transfersll l d h l f Amounts will include cash plus/minus Due to/froms

Cash Must Balance to THREEE h NACUBO F d G t b l Each NACUBO Fund Group must balance

If the Operating Statement ‘yellow’ highlighted rows are being pulled in ensure there are Balance rows are being pulled in, ensure there are Balance Sheet balances pulled in

Must reclassify negative Proceeds or positive Must reclassify negative Proceeds or positive Payments

Restatements of Cash should be rare Classification Differences should be rare

Errors Identified in FY13

Receivable/Payable Adjustments Some were made only in the CY, not the PY If an adjustment is made, it should impact both columns

P ll d B fit Payroll and Benefits Payables for these items not allocated among fund groups

Unearned Revenue Unearned Revenue Default flows to Tuition and Fees On Restricted tab, adjustment is required to move to the j q

correct section (most is usually moved to Grants/Contracts) Should the Cash Flow workpaper be changed to

automatically pull Restricted Unearned Revenue to the automatically pull Restricted Unearned Revenue to the Grants/Contracts section?

Adjust for Non-Cash Items

Non-Cash Gifts Some members are doing this already

Adjusted workpaper for some so this adjustment would flow correctly to Other Assets and resolve expense classification y pdifference in the reconciliation section

Tuition/Fee WaiversC id ki dj f hi h i Consider making an adjustment for this non-cash item

Other items we need to consider?

Questions?

Follow-Up Items

Volunteers Needed for Endowment Workgroup Analyze Service Centers Eliminations based upon

the new method Contact Us SAO Correspondence Assistance with Researching Items Assistance with Researching Items GASB Questions

Working together more during the year, seeing Working together more during the year, seeing results in improved reporting

Adjourn

AFR WorkshopA th d 6thAugust 5th and 6th

Thank you for attending!

financial reporting workshop march 26, · 2014-03-25 · financial reporting workshop march 26,...

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