Fund & Revenue Accounting

Purpose: To provide an overview of the fundamentals for basic fund accounting and the financial reporting structure within the context of higher education accounting, Generally Accepted Accounting Principles (GAAP) and the standards to which the university is audited.

This will help users understand how the Finance System, general ledger and chart of accounts are set up to meet these requirements. Since basic fund accounting is driven by the need to classify resources, this chapter also covers revenue accounting.

Pertinent Guidelines & Regulations

GAAP & GASB

Generally accepted accounting principles (GAAP) is a technical accounting term that encompasses the conventions, rules and procedures necessary to define accepted accounting practice at a particular time. These conventions, rules and procedures provide a standard by which financial presentation can be measured.

In the United States, two private-sector entities set the accounting standards for businesses: the Financial Accounting Standards Board (FASB) and the Governmental Accounting Standards Board (GASB). FASB standards apply to most corporations, for-profit entities and some non-profit entities, such as private universities. Public universities and other state and local governments are subject to GASB accounting and financial reporting standards.

In June 2015, GASB issued Statement No. 76. The objective of this statement is to identify鈥攊n the context of the current governmental financial reporting environment鈥攖he hierarchy of generally accepted accounting principles (GAAP). The 鈥淕AAP hierarchy鈥 consists of the sources of accounting principles used to prepare financial statements of state and local governmental entities in conformity with GAAP and the framework for selecting those principles. Statement No. 76 reduces the generally accepted accounting principles (GAAP) hierarchy to two categories of authoritative GAAP:

  • Statements issued by the Governmental Accounting Standards Board
  • GASB technical bulletins, implementation guides and guidance issued by the AICPA that has been cleared by the GASB

Statement No. 76 also provides guidance on the use of both authoritative and nonauthoritative literature in situations where transactions or events are not directly addressed by existing GAAP. 

Specifically, Statement No. 76 indicates that GASB concepts statements should be considered when resolving issues not addressed in authoritative pronouncements. GASB concepts statements continue to be considered a nonauthoritative piece of literature under the hierarchy. This statement supersedes Statement No. 55 that had been in effect since March 2009. GASB issued Statement No. 55, The Hierarchy of Generally Accepted Accounting Principles for State and Local Governments, which incorporated the hierarchy of GAAP for state and local governments into the GASB鈥檚 authoritative literature. The conventions, rules and procedures applicable to CU are comprised of authoritative guidance from various sources such as the GASB, the American Institute of Certified Public Accountants (AICPA), the Financial Accounting Standards Board (FASB), the National Association of College and University Business Officers (NACUBO), the Office of State Controller, etc. Each of these organizations issues various documents with differing levels of authority such as official statements, interpretations, implementation guides, fiscal rules, accounting standards, etc.

Higher Education Financial Reporting GAAP

Colleges and universities are required to follow GASB , The Financial Reporting Entity: Omnibus, unless otherwise specified. This statement supersedes Statement No. 34 and 35, which had been in effect since November 2002. In November 2010, GASB issued Statement No. 61 to improve financial reporting for a governmental financial reporting entity. Prior statements were amended to better meet user needs and to address reporting entity issues that have arisen since the issuance of those statements. Provisions of the statement are effective for financial statements for periods beginning after June 15, 2012.

For CU, the basic financial statement model was set by GASB , Basic Financial Statements鈥攁nd Management鈥檚 Discussion and Analysis鈥 for State and Local Governments, effective for fiscal year 2002 and amended in 2011 by GASB , Financial Reporting of Deferred Outflows of Resources, Deferred Inflows of Resources, and Net Position. The three basic financial statements are:

  • Statement of Net Position (SNP)
  • Statement of Revenue, Expenses and Changes in Net Position (SRECNP) 
  • Statement of Cash Flows

CU鈥檚 financial statements are audited annually by an external audit firm. The resulting  and supplemental documents are published by the Office of the University Controller. In addition, as an entity of the State of Colorado, our financial statements are included in the statewide (CAFR). Day-to-day operations form the foundation of CU鈥檚 financial reports. Due to the reporting requirements, it is essential that all CU personnel behave in a fiscally responsible manner and record financial transactions in accordance with applicable rules and regulations.

From a historical perspective, accounting at CU has had several influences. The following list has been largely superseded or clarified by more current guidance; however, it lends context to our current structure and references in this chapter remain where the guidance is still applicable.

  • GASB : Governmental College and University Accounting and Financial Reporting Models (Issued 10/91)
  • GASB : Basic Financial Statements鈥攁nd Management's Discussion and Analysis鈥攆or State and Local Governments (Issued 6/99)
  • GASB : Basic Financial Statements鈥攁nd Management鈥檚 Discussion and Analysis鈥攆or Public Colleges and Universities鈥攁n amendment of GASB Statement No. 34 (Issued 11/99)
  • GASB : The Hierarchy of Generally Accepted Accounting Principles for State and Local Governments (Issued 3/09)
  • Other GASB statements, concept statements and implementation guides
  • American Institute of Certified Public Accountants鈥 (AICPA) , The Meaning of Present Fairly in Conformity With Generally Accepted Accounting Principles
  • AICPA Industry Audit Guide:
  • AICPA Statements of Position

In addition, other accounting literature such as that from the Financial Accounting Standards Board (FASB), Federal Accounting Standards Advisory Board (FASAB), International Accounting Standards Board (IASB), National Association of College and University Business Officers (NACUBO), the Federal Office of Management and Budget (OMB), or other professional associations or regulatory agencies also give us useful information. The appropriateness of any accounting literature depends on its relevance to particular circumstances, the specificity of the guidance, and the general recognition of the issuer or author as an authority in the subject matter.

CU鈥檚 Financial Statements in Action

For examples of CU鈥檚 financial statements, and how we record revenues and expenses discussed in this chapter, refer to the Office of University Controller鈥檚 website on .
 
Proper fund accounting can be very complex. Yet, it forms the basis for how we measure our success, communicate our financial health to interested parties, and ensure proper stewardship of the resources we have been given. At CU Boulder, we take this responsibility very seriously. For more information about any topics in this chapter, reach out to the Campus Controller鈥檚 Office.